Federal Reserve “Increasingly Confident” Policy Positioned to Slow Economy, Reduce Inflation; WTI and Brent Rebound from Morning Lows
Dow +0.24%, S&P 500 +0.10%, Nasdaq +0.29%, Russell 2000 (0.46%)
US equities were narrowly mixed in Tuesday afternoon trading as November consumer confidence increased to 102 on the index, ahead of economists’ expectations. The S&P 500 Energy Index was up +0.85% versus the S&P 500 which rose +0.33%. The XLE settled at +0.82% while the XOP rose by +0.77%.
Today’s PRISM Oil & Gas Index update saw WTI +2.6% and Brent rebound from morning lows, settling at +2.6% and +2.5% respectively. Natural Gas fell by (0.8%) to $2.77. Notable gainers on Tuesday were Seadrill ($SDRL), up +6.6% on Q3 results with EBITDA coming in above expectations and raised 2023 guidance to $485-$505 million. Diamond Offshore Drilling ($DO) was up 3.10% and Noble Corp ($NE) rose 1.4% after being initiated as overweight at Capital One Securities.
Top performers in the PRISM Oil & Gas Index were Houston American Energy Corp. ($HUSA), up 3.80% and Mexco Energy Corporation ($MXC) which rose 3.0%. KLX Energy Services ($KLXE) was down 3.64% and Battalion Oil Corporation ($BATL) fell by 2.63%. The PRISM Oil & Gas index value is $161.70 and performance is up by +61.70% since inception.
Trader’s Lens
$BNO has been trading in a range since early 2022 and has been pretty much flat year to date in 2023. Brent and Crude oil have been performing a lot better than natural gas in that period.
Shares in Argentinian state-run oil company $YPF soared last week after President-elect Javier Milei said he would seek to privatize the oil company.
$LNG, a liquefied natural gas company is trading close to all time highs at about $180, a level that it first hit in October of 2022.
Petroleum refining company $MPC looks to be trading in a steady uptrend the last few years on its weekly chart. It has also maintained a weekly RSI(14) of at or above 50 for most of that period as well.
Today’s Top Headlines
Potential Delay for OPEC+ Meeting
WTI and Brent dropped this morning on news that Organization of the Petroleum Exporting Countries (OPEC+) discussions on policy have been difficult and that the 30 November semiannual meeting could be delayed again. Oil prices rebounded as an OPEC+ source said the group may rollover current policy, potentially removing the option of oil output cuts that will limit supply into 2024.
Saudi Arabia Pushes for Cuts
Bloomberg reported today that Saudi Arabia is asking OPEC+ members to reduce oil output quotas in an effort to shore up global markets. Other members, including Iraq, Russia and Kazakhstan have resisted, recently producing above their quotas, while some African members have lost so much production capacity, they are unable to cut further. The report noted that the UAE may be pressured to not move ahead with the 200K bpd quota increase permitted from January, which it negotiated this year following investments into new capacity. Angola and Nigeria resisted quota reductions starting next year. CME Group’s OPEC Watch Tool is now showing a 0% chance of an output cut this week.
