OPEC meeting on June 2, 2016 

OPEC’s (Organization of the Petroleum Exporting Countries) meeting in Vienna is scheduled on Thursday, June 2, 2016. There aren’t any optimistic cues that the group will reach an agreement to cap production. OPEC members will likely continue to produce more to maintain their market share. Higher production will pressure crude oil prices. Bloomberg surveys project a lower chance of any production freeze at this meeting. Meanwhile, Brent crude oil prices rose ahead of OPEC’s meeting. For more on crude oil prices, read the first part of the series. The collapse of Doha oil producers’ meeting also suggests that there’s less likelihood of any production cuts in this OPEC meeting.

How Did Crude Oil Prices React to the Last 3 OPEC Meetings?

OPEC meeting on December 4, 2015

On Friday, December 4, 2015, OPEC’s meeting was held in Vienna. The outcome of the meeting didn’t favor the oil market. Prices fell on the day. OPEC member nations didn’t discuss any price ceiling or collective production target for the group. It suggests that the group members can produce at record levels. So, the oil market would be flooded with excess oil and extend the global bear market. This also hinted at a new era of lower crude oil prices. Read OPEC’s Meeting: Is It a New Era of Lower Crude Oil Prices? to learn more. As a result, crude oil prices were under pressure after the meeting.

OPEC meeting on June 5, 2015

OPEC’s meeting in Vienna was scheduled on June 5, 2015. In this meeting, crude oil heavyweights continued to maintain their collective output of 30 MMbpd (million barrels per day) for the next six months. Over the past year, OPEC’s member nations have been producing crude oil that’s more than its collective output of 30 MMbpd. To learn more, read OPEC Maintains the Crude Oil Output Ceiling. This led to a consensus of oversupply. It put pressure on crude oil prices.

OPEC meeting on November 27, 2014

In OPEC’s meeting in Vienna on November 27, 2014, it decided to maintain its collective output of 30 MMbpd for the next six months. This led to a consensus of oversupply. It put pressure on crude oil prices. As a result, crude oil prices accelerated their fall. The fall started in June 2014.

Crude oil prices after OPEC’s June 2, 2016 meeting

Why does OPEC need to manage oil prices? We’ll discuss this in the next part of the series. Meanwhile, we could see oil prices decline after OPEC’s meeting. Oil prices tended to fall after the last three OPEC meetings. Lower oil prices impact Middle Eastern and US oil producers like Saudi Aramco, National Iranian Oil Company, Warren Resources (WRES), Bill Barrett (BBG), W&T Offshore (WTI), and Bonanza Creek Energy (BCEI).

Impact on ETFs  

The roller coaster ride in oil and gas prices impacts ETFs and ETNs such as the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the PowerShares DWA Energy Momentum ETF (PXI), and the First Trust Energy AlphaDEX ETF (FXN).

In the next part of this series, we’ll discuss OPEC’s production and strategy ahead of its meeting.

Latest articles

German chip maker Infineon Technologies has reportedly raised 1.55 billion euros (~$1.74 billion) in capital by selling its shares to fund its acquisition of Cypress Semiconductor (CY). Infineon has sold ~113 million new shares at 13.70 euros each.

As of June 18, Dunkin’ Brands (DNKN) was trading at $80.07, an 8.9% rise since reporting its first-quarter earnings on May 2. Also, DNKN was trading at a premium of 29.8% from its 52-week low of $61.69 and a discount of 1.6% from its 52-week high of $81.40.

19 Jun

Are Lower Oil Prices Weighing on ExxonMobil Stock?

WRITTEN BY Maitali Ramkumar

ExxonMobil (XOM) stock has fallen 7.1% in the second quarter so far. Let's review ExxonMobil's stock performance in comparison to oil price changes and equity market movements in the quarter.

19 Jun

As Facebook Unveils Libra, MSFT and CRM Join a Blockchain Group

WRITTEN BY Mayur Sontakke, CFA, FRM

On June 18, Facebook (FB) launched Libra, its own cryptocurrency. On the same day, CoinDesk published another piece of blockchain news that didn’t receive as much fanfare as Facebook’s Libra news. Was the timing a coincidence? We think not.

Uber Technologies (UBER) has picked Melbourne as another test site for its flying taxi service known as UberAir. The Australian city is the first international test site Uber has chosen for its flying taxi service. The addition of Melbourne brings the number of test locations Uber has picked for its UberAir service to three.

Lyft (LYFT) and Uber Technologies (UBER) are pushing back against California legislation that would require them to recognize their drivers as employees rather than independent contractors. The legislation would require companies like Lyft to give their drivers the compensation and benefits spelled out under California’s employment regulations.

172.31.16.229