Market Overview

OPEC Announces Increase In Output, Declines To Provide Firm Number

Share:
OPEC Announces Increase In Output, Declines To Provide Firm Number

Oil investors are cheering and oil prices are on the rise Friday following a production cap announcement from OPEC.

What Happened

At its meeting in Vienna Friday, OPEC announced that it will begin to raise its output but did not provide details about the extent of the hike. OPEC only said that it will no longer be cutting output beyond the 1.2-million-barrel-per-day cut it announced in November 2016. OPEC said it will not exceed 100-percent compliance with those previous decreases after cuts peaked at 152 percent — or 1.8 million bpd — in May 2018.

The Wall Street Journal said the agreement is to boost output by about 600,000 barrels a day and citied people familiar with the matter. 

Why It’s Important

The vagueness of the potential production hikes is a bit disappointing to investors, but the idea that OPEC is no longer concerned about the negative impacts of increasing production is a positive sign that the global oil markets have stabilized.

The price of WTI crude oil surged 3.5 percent to nearly $68/bbl on Friday morning, and the United States Oil Fund LP (ETF) (NYSE: USO) gained 3.4 percent.

Analysts are estimating OPEC will increase its production by between 600,000 and 800,000 bpd. Clearly, the market was fearing a more aggressive production increase. The market also likely saw commentary from Saudi Energy Minister Khalid al-Falih on Friday as bullish as well. Al-Falih said there will be no “immediate flood” of oil into the market.

What’s Next

Oil investors will be watching to see just how aggressive OPEC will be with its production hikes and whether analyst predictions of between 600,000 and 800,000 bpd are correct.

Related Links:

8 Energy Stocks To Watch Ahead Of OPEC Meetings

Ahead Of OPEC, An Analyst Is Bullish On Energy Stocks

Posted-In: News Specialty ETFs Commodities Events Top Stories Markets Media ETFs Best of Benzinga

 

Related Articles (USO)

View Comments and Join the Discussion!
Fastest Market News Application
You'll Hear It First On Pro
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Mid-Day Market Update: Crude Oil Up Over 4%; WillScot Shares Spike Higher

Micron's DRAM Trends, Cost Leadership, Buyback Potential Win Bullish Sell-Side Initiation