Energy stocks extend gains as crude oil rises for fourth straight session
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Energy was the only S&P sector to end with a gain Thursday, helped by a fourth straight gain in crude oil futures a day after OPEC+ announced a larger than expected 2M bbl/day production cut.
Front-month Nymex crude (CL1:COM) for November delivery finished +0.8% to $88.45/bbl, its highest settlement value in three weeks, while December Brent crude (CO1:COM) closed +1.1% to $94.42/bbl, its best settlement since September 5.
Eight of the day's top 15 S&P stocks were in the oil and gas group: (APA) +4.1%, (OXY) +4%, (MRO) +3.9%, (XOM) +2.9%, (HES) +2.7%, (PXD) +2.3%, (SLB) +2.2%, (FANG) +2.1%.
ETFs: (NYSEARCA:XLE), (XOP), (VDE), (OIH), (CRAK), (NYSEARCA:USO), (BNO), (UCO), (SCO), (DBO), (USL), (USOI), (NRGU)
Goldman Sachs raised its Q4 price forecast for Brent crude to $110/bbl following the OPEC+ action and said the reduction likely will prompt a response from the U.S., possibly including a coordinated release of strategic reserves.
Morgan Stanley analysts also are more bullish on oil, saying Brent "will find its way to $100/bbl quicker than we estimated before" as the combined impact of the production cut and the European Union's embargo on Russian output suggests a tighter oil market ahead.
China may add a meaningful amount of demand for crude, helping boost prices to $110, Global X Management research director Rohan Reddy said.
Saudi Arabia's energy minister said the real-world impact of the cuts will be closer to 1M-1.1M bbl/day, given some OPEC+ members already are pumping well below their quotas; those totals would still rank as the biggest reduction since the start of the pandemic.
Meanwhile, the threat of continued Federal Reserve rate hikes pulled utilities to the bottom of the day's sector standings.