Two years have passed since Saudi Arabia let demand and supply determine the price of oil in the market. This mechanism led to a heavy selling in the price of Brent crude from $115 per barrel in June 2014 to a low of $28 per barrel in January 2016.
However, on November 30, OPEC members pledged to remove 1.2 million barrels of oil per day if (an only if) non-OPEC countries reduce production by a further 600,000 barrels per day. This could be a game changer and result in a 2% reduction in global production. A much greater impact that the market was pricing in. This led to the price of oil rallying just over 8% on the day pushing the price back up above the $50 level.
But oil stocks aren’t out of the woods yet. The next important date is the 9th December. On that day we will know whether non-OPEC members such as Russia will be on board and commit to cut production also. In the meantime, investors position themselves depending on their outlook of the meeting.
Some of the top performing energy stocks in the STOXX 600 Oil & Gas Index (3.75% up since 30th November 2016) are as follow:
Tullow Oil plc (ticker TLW, 16.36% up)
Tullow Oil plc explores for and produces oil and gas. The Group's assets are in Africa, Europe, South America and Asia.
Saipem S.p.A (ticker SPM, 11.53% up)
Saipem S.p.A. offers construction and offshore and onshore drilling services. The Company installs sub-sea pipelines, installs fixed platforms, manages complete onshore construction projects, and drills for oil mainly in Italy, Algeria, Nigeria, and the Arabian Peninsula.
Statoil ASA (ticker STO, 8.81% up)
Statoil ASA explores for, produces, transports, refines, and trades oil and natural gas. The Company explores for oil in Europe, Africa, the Middle East, Asia, and the Americas.
Technip SA (ticker TEC, 6.64% up)
Technip SA designs and constructs industrial facilities. The Company designs and builds factories which produce and process petroleum products, natural gas, and chemicals, and generate electricity. Technip builds offshore facilities for the petroleum industry. The Company operates worldwide.
Eni SpA (ticker ENI, 6.16% up)
Eni S.p.A. explores for and produces hydrocarbons in Italy, Africa, the North Sea, the Gulf of Mexico, Kazakhstan, and Australia. The Company both produces natural gas and imports it for sale in Italy and elsewhere in Europe. Eni transports natural gas in pipelines. The Company generates and trades electricity, refines oil, and operates gasoline service stations.
Repsol SA (ticker REP, 5.79% up)
Repsol S.A., through subsidiaries, explores for and produces crude oil and natural gas, refines petroleum, and transports petroleum products and liquefied petroleum gas (LPG). The Company retails gasoline and other products through its chain of gasoline filling stations. Repsol's petroleum reserves are in Spain, Latin America, Asia, North Africa, and the Middle East and United States.
Royal Dutch Shell (ticker RDSA, 4.99% up)
Royal Dutch Shell PLC, through subsidiaries, explores for, produces, and refines petroleum. The Company produces fuels, chemicals, and lubricants. Shell owns and operates gasoline filling stations worldwide.
This article was issued by Kristian Camenzuli, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.
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