Oil Sell‑Off Sparks Investment Opportunities

Jun 12 15:06 2019 Print This Article

In recent weeks, renewed trade concerns, slowing oil demand, and a notable acceleration in implied U.S. oil production have spurred a material sell-off in oil. Similar concerns caused oil prices to drop at the end of last year, which prompted OPEC+ (i.e., the Organization of the Petroleum Exporting Countries plus 10 additional oil-producing nations) to cut production, reversing policy set earlier in the year of increasing output ahead of a reintroduction of sanctions on Iran. While OPEC+ output is now near multiyear lows, we do not believe OPEC will abandon the production accord at its upcoming meetings in Vienna (likely in the first week of July) in order to meet revenue targets, given that last year’s experience – boosting output and needing to reverse course soon after – will be informing its decisions. Moreover, actual U.S. oil production may not be as strong as the implied data suggest.

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