Today oil prices breached levels that have oil traders talking about $100 a barrel oil again on OPEC’s decision at its weekend meeting not to boost oil production.
U.S. benchmark West Texas Intermediate climbed 2.15% as of noon today, September 24, to move solidly past the $70 a barrel barrier to $72.30. International benchmark Brent crude soared 2.79% to break the $80 a barrel level at $81.00. These are the highest prices in four years.
At the meeting OPEC decided to boost production only if customers showed signs of increasing their demand for oil. In other words, the oil cartel said it won’t raise production just to reduce oil prices as U.S. President Donald Trump has urged. “The market is well-supplied,” Saudi Energy Minister Khalid Al-Falih said after the meeting. “The reason Saudi Arabia didn’t increase more is because all of our customers are receiving all of the barrels they want.”
And OPEC’s non-action amounts to a decision not to automatically replace Iranian production lost due to new sanctions.
Oil traders now say that OPEC’s decision on production and market technicals both point in the same direction–up. Bullish traders are talking about $90 a barrel for Brent crude by Christmas and $100 a barrel in early 2019.
On the day oil stocks in my portfolios closed up: Pioneer Natural Resources (PXD) ahead 1.35%; Diamondback Energy (FANG) up 3.35%; and Equinor (EQNR) higher by 3.79%