Oil stocks are on the rise Friday following an announcement from the Organization of the Petroleum Exporting Countries (OPEC) about production.
OPEC announced yesterday that it and its allies have agreed to keep production cuts in place through April. That means the higher price for oil is here to stay for a little longer and that news is pushing certain oil stocks higher.
Oil companies today that are getting a boost from the OPEC announcement include Marathon Oil (NYSE:MRO), Exxon Mobil (NYSE:XOM), Occidental Petroleum (NYSE:OXY), and Chevron (NYSE:CVX). This comes as U.S. companies reveal they don’t have plans to increase production in 2021. Instead, they plan to save back cash to handle possible rough times for the oil industry, reports Barron’s.
It makes sense that oil production remaining low would increase prices, but there’s more to it than that. This decision also comes alongside news that some states are starting to lift restrictions concerning the novel coronavirus.
With limitations being lifted, that means more people are going to be travelling, and that means they’ll be an increase in demand for gas. A possible surge in demand for gas coupled with the end of the pandemic could cause the price of oil to surge even higher.
MRO stock was up 4.9%, XOM stock was up 1.9%, OXY stock was up 5.7%, and CVX stock was up 2.3%.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.