Chevron Corporation (NYSE:CVX), BP plc (ADR) (NYSE:BP), Royal Dutch Shell plc (ADR) (NYSE:RDS.A) and Exxon Mobil Corporation (NYSE:XOM) shares are worth monitoring on Monday after oil price increased in the Asian markets. The increase in commodity price comes on the heels of Saudi Arabia and Russia expressing their opinion that production could be extended until March next year from the middle of the current year.
While OPEC and other nations are trying to reduce production for price stabilization of oil, the American drillers have been increasing their count to play a spoil sport in stabilizing the oil price. For instance, for the week ended May 12, drillers in the United States have added nine rigs taking the overall total to 712, which is the most after April 2015, according to a Reuters report. Production from the America also increased more than 10 percent to 9.3 million barrels per day after its mid-2016 trough.
In any case, Saudi Arabia and Russia’s announcement are significant since they have a control of approximately 20 million barrels a day in output on a day-to-day basis. This is equal to 20 percent of consumption among the global community. Their ministers are trying to do whatever they can to stabilize the oil price and slash commercial oil inventories to the five-year average level. Their action would also suggest that they are getting necessary support from the member countries to ensure oil price stability.
Last week, Goldman Sachs have cited three reasons for oil price to remain challenged and that the rally will not be similar to the one witnessed previously. One of the reasons is the shale oil. The second is the falling demand in China and the third is the gradual increase in interest rate hikes by the Fed. In the normal course, any interest rate hikes meant commodity prices would rally.
Though oil price reached $49 a barrel representing an increase of nearly 2.4 percent from Friday’s closing price, there is an element of doubt whether the rally could extend for a long time due to American drillers’ action. The following oil companies stock could be watched on Monday:
- BP plc (ADR) (NYSE:BP) is trading up 1.95 percent in pre-market on Monday.
- Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is gaining 1.30 percent in pre-market on Monday.
- Chevron Corporation (NYSE:CVX) edged up 0.08 percent in Monday’s pre-market.
- Exxon Mobil Corporation (NYSE:XOM) added 0.67 percent in pre-market.
- Total SA (ADR) (NYSE:TOT) is gaining 1.38 percent in pre-market.
- Marathon Oil Corporation (NYSE:MRO) lost 1.04 percent on Friday’s closing.
- ConocoPhillips (NYSE:COP) closed Friday with a loss of 0.97 percent.