Weeks ago, oil prices plummeted into negative territory.
All thanks to far too much supply, and no demand. However, with “stay at home” orders being lifted, and economies reopening, we’re just beginning to see a return of demand.
“While demand for petroleum products fell off a cliff in April, the outlook is improving as economies around the world begin to reopen. Raymond James, which has been tracking shelter-in-place orders, said that of the 3.9 billion people worldwide who have been under lockdown at some point since January, 3.7 billion, or 95%, have experienced some sort of reopening,” reports CNBC.
There’s also hope OPEC+ will agree to extend output cuts during its conference this week. According to Business Insider, Russia and other OPEC members are looking into a one-month extension to cuts that are set to end in June. Meanwhile, the Saudis may be in favor of extending production cuts for another one to three months longer.
All in an effort to rebalance the supply-demand issues.
This comes just weeks after OPEC+ agreed to cut production by up to 9.7 million barrels a day in both May and June. That brought some relief to the oil market battered by the coronavirus.
If we see an extension of cuts, some of the top oil stocks to consider include:
Exxon Mobil (XOM)
In recent months, XOM plummeted from $70 to less than $30. However, it’s just now beginning to recover from those lows, and could potentially refill a bearish gap around $58.
Chevron (CVX)
After plunging from $110 to less than $55, CVX is also recovering quickly. At the moment, it’s consolidating just under $94. What we’d like to see is a potential break out with a bearish gap refill around $110 again near-term.
Other top ways to trade a bigger potential recovery in oil is by trading ETFs, such as the United States Oil Fund (USO), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and even ProShares Ultra Bloomberg Crude Oil (UCO).
Unless something else catastrophic happens in the world, oil could refill its bearish gap around $47, near-term. Stay tuned for more on OPEC developments.
The post The Top Ways to Trade a Potential OPEC+ Extension appeared first on Morningology.
