Oil price increased on Friday to cross $50 a barrel level. This is probably the highest level in a month as optimism among investors are growing on the possibility of extension of production cut by OPEC and other big countries. As a result, BP plc (ADR) (NYSE:BP), Royal Dutch Shell plc (ADR) (NYSE:RDS.A), Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) could come into focus on Friday.
Oil price has been facing rough weather since the commencement of March. The commodity prices dropped to less than $47 a barrel from more than $56 a barrel. The primary reason behind this is the increasing input from the American companies whereas others led by OPEC are trying to cut productions. This included Russia too.
Investors are also trying to shift their investment from share market that saw a carnage on Wednesday on political turmoil. Though it eased to allow the stock markets to rebound, there are no fresh catalysts to support investors’ sentiments to remain upbeat. However, investors are also cautious and not shifting their portfolio altogether.
The latest rise in oil price is due to an upcoming meeting of OPEC leaders’ o May 25 in Vienna. The meeting will take a call on the production output policy. Effectively, it would mean whether to extend the production cut and the period until which it could extend so that price stabilization could be achieved during the period.
Though there is optimism about oil price, there was also cautionary note from Goldman Sachs last week. The brokerage 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.
At time of writing this, WTI crude oil price is trading up 1.013 percent. The following oil companies stock could be watched on Friday:
- BP plc (ADR) (NYSE:BP) is trading up 1.18 percent in pre-market on Friday.
- Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is gaining 0.94 percent in pre-market on Friday.
- Exxon Mobil Corporation (NYSE:XOM) added 0.61 percent in pre-market.
- Chevron Corporation (NYSE:CVX) edged up 0.45 percent in Thursday’s normal trading session.
- Total SA (ADR) (NYSE:TOT) closed Thursday’s normal trading with a gain of 0.28 percent.
- Marathon Oil Corporation (NYSE:MRO) lost 1.60 percent on Thursday’s closing.
- ConocoPhillips (NYSE:COP) closed Thursday with a modest gain of 0.02 percent.