Exxon And Chevron's New $37-Billion Project Is 'Inflection Point' For Oil Market
Analysts and traders can make all the predictions they want about where oil prices are headed and when the global oil industry will begin to recover. But, the true oil and gas recovery will begin when cash starts flowing back into the space.
Recent news from Chevron Corporation (NYSE: CVX), Exxon Mobil Corporation (NYSE: XOM) and BP plc (ADR) (NYSE: BP) could be the first signs that the frozen oil industry is beginning to thaw. Chevron, Exxon and several partners announced this week that they have committed $37 billion to expansion of the Tengiz oil project in Khazakhstan.
Just last week, BP approved a multi-billion-dollar gas export expansion. Last month, BP announced it will be fast-tracking a major gas project in Egypt.
Jefferies analyst Jason Gammel called the Tengiz project “an inflection point” for the industry.
“It shows that the companies are at a point where they can consider investing in longer-term projects,” Gammel explained.
Here in the United States, battered shale oil producers like Pioneer Natural Resources (NYSE: PXD) are also cautiously optimistic that oil prices will now remain high enough to justify production hikes. In response to WTI’s recent push above $50/bbl, shale producers have begun to add a handful of rigs and have started fracking wells that have already been drilled.
Disclosure: The author holds no position in the stocks mentioned.
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