Exxon Mobil and Chevron advanced Friday as U.S. oil prices remain under pressure following the decision by OPEC+ to postpone its upcoming meeting as Saudi Arabia lobbies cartel members regarding production levels.
The Organization of Petroleum Exporting Countries and its allies, led by Russia, had been scheduled to meet on Sunday, Nov. 26. Analysts speculated the oil cartel could approve additional cuts to members' production quotas in order to prop falling oil prices.
However, Wednesday morning the oil cartel pushed the gathering until Nov. 30. Saudi Arabia frustrated with cartel members and partners, namely Iraq and Russia, which have been producing above their pledged quota levels, according to a Bloomberg report. Though the delay is unusual, it is not unprecedented. Saudi Arabia used similar tactics twice since 2020, once with Mexico in April 2020 and another time with the United Arab Emirates in June 2021.
U.S. oil prices plummeted more than 4% Wednesday early before settling below $77 per barrel. On Friday, West Texas Intermediate (WTI) prices fell 13% to $76.10 as traders and investors await next week's OPEC+ meeting.
Meanwhile, the Energy Information Administration (EIA) reported Wednesday crude inventories increased by 8.701 million barrels last week, exceeding forecasts for a 3.592 million build. A hostage release agreement between Israel and Hamas may also have eased some upward pressure on oil prices.
Exxon Mobil stock and Chevron stock edged up 0.6% and 0.4%, respectively, Friday during premarket action.
Exxon Mobil: OPEC+ And Oil Price Caution
Investors and oil traders have remained cautious in recent weeks, leaning toward views of weaker crude demand and a global economic slowdown. Both Brent and West Texas Intermediate benchmarks have fallen in four straight weeks on growing concerns about the demand outlook.
However, between Nov. 16-Nov. 21, U.S. oil prices rallied more than 6% on expectations OPEC+ would decide to make additional production cuts at its Nov. 26 meetings. On Tuesday, Goldman Sachs predicted a 35% chance the oil cartel makes deeper supply reductions.
Beginning in late 2022, OPEC+ has been reducing its member production quotas in an attempt to prop Brent crude prices near $80 a barrel. During the OPEC+ meeting in June, the cartel made plans to cut supplies by more than 3 million barrels per day into 2024.
The EIA estimates OPEC crude production averaged 27 million barrels per day in August, the lowest since Aug. 2021. Meanwhile, Saudi Arabia's production that month averaged 8.7 million barrels per day, the fewest barrels since May, 2021.
Three OPEC+ sources told Reuters Tuesday the cartel was set to consider additional oil supply cuts when it meets.
Third Bridge analyst Peter McNally wrote Wednesday that current crude demand is "playing out as usual with inventories rising since the end of the summer."
McNally said that the most likely outcome from the OPEC meeting is an extension of current production cuts until "seasonal demand picks up again in the spring of 2024."
"Spare capacity, albeit concentrated in Saudi Arabia, has kept prices from running away to the upside. At the same time, seven years of disciplined supply management from OPEC has limited the downside to oil prices except in the most extreme of times during the onset of the pandemic," McNally said.
Energy Stocks And Oil Prices
XOM and CVX have both declined more than 1% in November as U.S. oil prices dropped more than 7% this month.
Oil prices bounced after the Oct. 7 terrorist attacks carried out by Hamas against Israel. The risk that the war with Iran-backed Hamas in southern Israel would expand to fighting with Hezbollah, another Iran-backed group, on Israel's northern border with Lebanon, raised concerns that the U.S. would sanction Iran's exports.
Oil traders acting on those concerns sent U.S. crude oil prices nearly 9% higher between Oct. 6 and Oct. 19, to more than $88 per barrel. However, that war premium has diminished.
Along with Exxon Mobil stock, fellow energy plays ConocoPhillips and Occidental Petroleum have also dropped in November.
On Friday, OXY fell a fraction while COP gained 0.5%
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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