Oil is trading comfortably above $80 a barrel today after OPEC+ made a surprise announcement that it will cut production from next month.
Krosby’s remarks on today’s development
On Sunday, the Organisation of the Petroleum Exporting Countries said it will lower output by 1.16 million barrels a day for the rest of this year.
That’s on top of 500,000 barrels a day of oil that Russia removed from the output in March – a cut it now says will also remain in place through the end of 2023. In a note sent to Invezz, Quincy Krosby of LPL Financial related today’s development to the recent bank failures.
Recession fears have been exacerbated by the banking situation [raising] concerns that oil prices will suffer as demand pulled back. Earnings expectations for the energy sector were being cut as central banks continued to raise rates.
“XLE” – the Energy Select Sector SPDR Fund is up 4.0% on Monday.
Three energy stocks worth buying right now
Krosby also noted that the Nigerian Petroleum Minister in a statement late last year indicated the OPEC+ wanted oil price to remain around $90 a barrel. According to the Chief Global Strategist for LPL Financial:
OPEC+ understands its liquid gold will, at some point, lose its shine. Until then, as OPEC+ spends trillions of dollar rebuilding infrastructure and refocusing away from crude oil, price will be used more directly and aggressively.
Rising prices, however, makes it more challenging for the Federal Reserve to win its war against inflation.
Also on Monday, Hightower’s Stephanie Link revealed intent to load up on three energy stocks – Chevron, Schlumberger, and Diamondback Energy following the OPEC+ news.
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