Stocks related to the energy sector fell on Tuesday and weighed on the market. On March 14, the S&P 500 energy sector fell 1.1% to the lowest levels since early November. The slump in oil prices amid OPEC’s monthly report dented the sentiment in the energy sector
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OPEC’s monthly report, released on March 14, raised concerns about the increase in crude oil supplies. According to OPEC, despite production cuts by OPEC and non-OPEC producers, crude oil inventories continue to rise in the US and Europe. Since January 1, OPEC decreased its supply by 1.2 MMbpd (million barrels per day). The price weakened despite producers’ supply cuts.
According to OPEC’s report, the production targets of the 11 OPEC producers that took part in the deal fell to 29.68 MMbpd. Even though OPEC’s report didn’t mention the percentage of compliance, according to Reuters, the compliance is more than 100% in production cuts. In the report, OPEC revised its forecast on the supply of non-OPEC producers to rise by 0.4 MMbpd. It’s 0.16 MMbpd higher than the previous estimate. Similarly, the forecast for oil output from the US in 2017 rose by 0.1 MMbpd.
OPEC added that crude oil inventory levels will start to fall this year due to the successful implementation of supply cuts. It also expects the crude oil market to start balancing from 2H17. On March 14, the Energy Select Sector SPDR ETF (XLE) fell 1.1%. ONEOK (OKE), Marathon Oil (MRO), and Southwestern Energy (SWN) were the top losers in the energy sector on Tuesday.