Chevron and Exxon Mobil veered higher along with other energy stocks Monday after OPEC+ announced a surprised production cut. U.S. oil prices also jumped to levels not seen since late January. CVX bolted higher Monday.
On Sunday, OPEC+, which includes the Organization of the Petroleum Exporting Countries and key allies such as Russia, announced an unexpected crude oil production cut of about 1.15 million barrels a day starting in May.
Saudi Arabia will trim production by 500,000 barrels per day. Kuwait, the United Arab Emirates, Iraq, Algeria and Kuwait are among members that will also cut. Russia said its already-planned March-June cut will now last through 2023.
The surprise came as the oil cartel previously signaled it would hold supply steady throughout 2023. In October, OPEC+ cut output by 2 million barrels per day.
The White House signaled its displeasure with the OPEC+ move, Reuters reported. OPEC+ may have been frustrated by the Biden administration's announcement that it would not refill the Strategic Petroleum Reserve when prices came down.
The OPEC production cut also comes as the price of gasoline at the pump in the U.S. is beginning to increase again, according to AAA.
"This move by OPEC+ is timed for maximum effect on the market, heading into the summer driving season," Third Bridge analyst Peter McNally wrote Monday.
U.S. oil futures spiked more than 6% to nearly $81 per barrel on Monday, with prices hitting highest level since late January. In mid-March, West Texas Intermediate (WTI) sank to 15-month lows, around $67.61 per barrel, amid concern over the SVB Financial crash. Energy stocks also mostly skidded along with oil prices.
Brent crude futures jumped 6% to $84.72 per barrel Monday, hitting an intraday level not seen since early February.
Chevron stock popped 4% Monday during market trade. Exxon Mobil jumped 5.9%. Energy stocks and 0il field services firms were also sent higher on the news. Halliburton and SLB leapt 7.8% and 6.6% Monday, respectively. Baker Hughes rallied 3.6%.
Chevron Stock, Energy Stocks Respond To OPEC
Energy stocks broadly surged during early premarket trade Monday, with Chevron stock, Exxon Mobil and others spiking.
Diamondback Energy and Occidental bolted up 6.8% and 4.4%, respectively. Devon Energy rallied 5.3%. ConocoPhillips climbed 9.3% higher Monday.
Coterra Energy advanced 2.4% while Marathon Oil surged 9.9%. Energy stock APA gained 8.7%.
Chevron stock ranks ninth in the Oil & Gas-Integrated industry group. CVX shares have a 72 Composite Rating out of 99. The stock has a 54 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 76.
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