Energy Insiders Are Buying As Oil Prices Face Hard Landing

Oil prices are heading southward on the global supply glut. OPEC countries are planning to raise production levels shortly that could disrupt the supply-demand balance. In fact, concerns about increased output amplified due to Chinese tariffs on energy imports from the United States.

Fall in oil prices are a dampener for energy stocks. But why are energy sector insiders buying again? That is because there are several underlying factors that are expected to push oil prices upward in the near term.

Before we look at the factors and stocks that insiders are buying, let’s look at what is dragging oil prices down for the time being.

OPEC and its Allies Agree to Boost Output

OPEC and its allies including Russia had decided to hold back output by nearly 1.8 million barrels a day beginning in 2017. That agreement is, however, set to expire by the end of this year. In fact, major oil producers will meet on Jun 22 in Vienna to decide the fate of further oil production. Saudi Arabia, the de facto leader of the OPEC is considering a production boost of 500,000 to 1 million barrels a day. The Saudis have already raised output level last month by 100,000 barrels a day. Russia too is contemplating an increase of about 1.5 million barrels a day, as per commodity analysts led by Eugen Weinberg at Commerzbank.

U.S. crude production, in the meantime, is forecast to touch an annual record of 10.79 million barrels a day this year, according to the Energy Information Administration (EIA). Data from oil-field services firm Baker Hughes additionally revealed that the number of active U.S. rigs drilling for oil, better known as the gauge of domestic production activity, rose by 1 to 863 last week, leading to the fourth-straight weekly jump.

This oil supply glut has weakened oil prices. The West Texas Intermediate crude, the U.S. benchmark traded on the New York Mercantile Exchange, declined by $1.83, or 2.8%, to settle at $65.06 a barrel on Jun 15, while the Brent crude, the global benchmark lost $2.50, or 3.4%, to reach $73.44 a barrel.

1 2 3 4
View single page >> |

Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.