Energy and Resources Stocks like Beach Energy that charged high by about 8.6 per cent on December 01, 2017, got a boost from the latest development in the oil sector with the OPEC (Organisation of the Petroleum Exporting Countries) and non-OPEC producers led by Russia moving a step closer to reduce the puffy oil stockpiles. The producers have now agreed to extend the oil output cuts by nine months until the end of 2018. The supply is said to be cut by about 1.8 million barrels per day (bpd) for raising oil prices, and this deal expires in March. The aim is to clear up a global glut of crude and support prices to stay above $60 a barrel.
Kuwait’s oil minister has also signalled for co-operating with the non-OPEC countries till the end of 2018. On the other hand, Nigeria and Libya have been exempted from cuts owing to geopolitical situation and already low production. The combined output of Nigeria and Libya at 2017 levels was slated to be below 2.8 million bpd.
Meanwhile, Russia has also flagged the way to exit from the cuts in order to avert a situation that can cause a deficit. It has been emphasized that Russia needs much lower oil prices from the point of balancing its budget in comparison to Saudi Arabia, which is expected to benefit from high-priced crude given the stock market listing due for Aramco. It appears that the countries might exit the deal in a gradual manner in order to avoid any surprises to the market.
It is noteworthy that production cuts since the beginning of 2017 have enabled curbing the excess global oil stocks by half. However, there are also emerging concerns on increase in rig count by US producers over the next few months due to higher prices, which can reverse the anticipated scenario.
In the meantime, other key stocks in the sector surging up at the back of the news included BHP Billiton, which was up 1 .03 per cent, and Woodside Petroleum, which was up 1.2 per cent.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.