Yahoo Finance Why OPEC's Latest Move Failed to Give Oil Prices a Major Boost?
Top oil exporter Saudi Arabia agreed on Sunday to slash output by an additional one million barrels per day from next month — a move seen as an attempt to boost flagging oil prices that have cooled off due to concerns about a slowing global economy.
Some oil-related stocks that could benefit in the current environment include NOW Inc. DNOW, Murphy USA MUSA and Dril-Quip, Inc. DRQ.
The announcement, which came during a meeting between OPEC and its allies, including Russia, comes on top of Riyadh’s voluntary pledge in April to withhold 500,000 barrels of production each day. Following the latest declaration, the cartel’s most influential member will be pumping around 9 million barrels of oil each day, the least in two years.
OPEC+ also informed that it kept this year’s official production targets intact, while the Vienna-based producer group would look to restrict combined oil volumes for 2024 to 40.46 million barrels per day.
While the group is responsible for some 40% of the global oil supply, Saudi Arabia’s unilateral production cut failed to set off a rally in the commodity. On the New York Mercantile Exchange, WTI crude futures gained just 41 cents (or 0.6%) to close at $72.15 a barrel yesterday. In fact, the market hasn't been kind to the commodity in 2023, with crude trading around 15% lower year to date and breaking below the $70 threshold on more than one occasion.
Analysts attribute the muted response to a lack of coordination among the group members and the overall weakness in the energy space with an imminent supply glut. However, Saudi Arabia’s move should effectively put a floor under prices, preventing it from any major bearish move.
At this juncture, investors interested in the oil-energy sector might look at operators like NOW Inc., Murphy USA and Dril-Quip, each carrying a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NOW Inc.: DNOW beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. NOW has a trailing four-quarter earnings surprise of 32.1%, on average.
DNOW is valued at around $951 million. NOW has seen its shares lose 19.6% in a year.
Murphy USA: It is valued at some $6 billion. The Zacks Consensus Estimate for MUSA’s 2023 earnings has been revised 5.1% upward over the past 30 days.
Murphy USA, headquartered in El Dorado, AR, beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed in the other. MUSA shares have gained 13.2% in a year.
Dril-Quip: It beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. DRQ has a trailing four-quarter earnings surprise of 119.8%, on average.
Dril-Quip is valued at around $763.8 million. DRQ has seen its shares fall 23.6% in a year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Dril-Quip, Inc. (DRQ) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
NOW Inc. (DNOW) : Free Stock Analysis Report
