The energy group easily tops the S&P sector rankings as of Friday, +3.2%while crude oil prices jump following Russia’s plan to cut oil production by 500k bbl/day in retaliation against western price caps.
Announced cut is ~5% of Russia’s latest crude output, which the International Energy Agency estimates fell to 9.77 million bbl/d in December.
Russian Deputy Prime Minister Alexander Novak said the cut would be calculated from actual production levels, not Russia’s quota under the OPEC+ production deal; that move was not made in agreement with OPEC+.
US WTI crude (CL1:COM) for March delivery +2.2% at USD 79.78/bbl and April Brent crude (CO1:COM) +2.2% to 86.34 USD/bbl.
Eleven of the 15 biggest gainers on Friday in the S&P 500 are in the energy group: Valero Energy (VLO) +5.4%Marathon Oil (MRO) +5.2%, APA Corp. (WATER) +4.8%Devon Energy (DVN) +4.7%EOG Resources (EOG) +4.3%Marathon Petroleum (MPC) +4.2%Phillips 66 (PSX) +3.9%Diamondback Energy (FANG) +3.8%ConocoPhillips (COP) +3.5%Exxon Mobil (XOM) +3.5%Schlumberger (SLB) +3.5%.
ETFs: (NYSEARCA:XLE), (XOP), (VDE), (OIH), (CRAK), (NYSEARCA: USE IT), (BNO), (UCO), (SCO), (DBO), (DRIP), (GUSH), (USOI), (NRGU)
Some observers believe the cuts in Russia are a sign that the country may be having trouble unloading its energy products, but Manish Raj of Velander Energy Partners disagrees, saying the cuts are not due to Russia’s inability to market its products, but to customers being turned away from discount. are demanding.
“Russia has been able to sell every barrel it produces, but they are annoyed by the big discounts that everyone is asking for,” Raj said. MarketWatch. “By reducing the quantities, Russia wants to signal that it would rather give up the quantity than reduce its price.”
The energy sector is on track to gain ~4% on the week after lagging all groups last week, falling alongside crude oil prices on the back of rising US inventories.