Crude oil producers are surging in early trading Monday as OPEC and its allies consider a 1M bbl/day production cut, which would be the biggest reduction since the pandemic, sending WTI crude oil prices +5.6% to ~$84/bbl.
Ten of the 15 top gainers on the S&P 500 in the early going are energy names: (MRO) +8.5%, (APA) +7.1%, (DVN) +6.8%, (FANG) +6.3%, (PXD) +6.3%, (EOG) +6.2%, (HAL) +5.8%, (COP) +5.7%, (HES) +5.4%, (OXY) +5.3%.
"The OPEC ministers are not going to come to Austria for the first time in two years to do nothing," Dan Pickering of Pickering Energy Partners said, referring to the cartel's first in-person meeting since 2020. "So there's going to be a cut of some historic kind."
OPEC has never implemented an output cut in such a tight market, with inventories at historically low levels and demand remaining resilient, Goldman Sachs said in reiterating its expectation for triple-digit WTI crude over the next three months.
Separately, APA Corp. said it expects Q3 production of 212K bbl/day, exceeding the high end of previous guidance.