Energy Rally: Prices for US Crude Oil are Up 35% YTD

#oil #energy #OPEC+ #travel #recovery

Recent data has shown us signs of an economic recovery continuing to gain momentum. The number of Americans filing new claims for jobless benefits dropped to a 4-month low last wk, while US consumer sentiment improved in early March to its strongest in a yr.

Investors are focused on supply dynamics as another catalyst for Crude Oil prices and energy stocks.

The Organization of the Petroleum Exporting Countries (OPEC+) and its allies last year cut output as demand collapsed due to the VirusCasedemic chaos. The group agreed earlier this month to extend most output cuts into April.

Any efforts by Mr. Biden’s administration to regulate US drilling could support prices by keeping supply in check, investors said. “There is more likely to be an aggressive regulatory regime, which would rein in supply, which would be a positive for commodity prices,” said a portfolio manager at NFJ Investment Group.

Investors said they want to see whether companies are spending on new drilling, which could oversupply the market and eventually weigh on prices, or pay down debt and bolster dividends.

Five international energy majors cut their capital spending by about 20% on average last year to $80-B and are expected in aggregate to generally maintain that spending level in Y 2021.

Energy companies need to maintain their discipline, they need to stick to capital budgets that are constrained and not drill as much and give investors confidence that this is not going to be a short-lived cycle.

Another Key factor is how fast travel might rebound to pre-virus chaos marks.

In this US reopening we expect to seep people driving more and spending more.

Have a healthy weekend, Keep the Faith!