Traders Are Tracking OPEC’s Meeting on June 22


Dec. 4 2020, Updated 10:53 a.m. ET

OPEC’s meeting 

According to Bloomberg, the crude oil production from OPEC and non-OPEC producers is expected to increase by 300,000 bpd–600,000 bpd (barrels per day) in OPEC’s upcoming meeting. The possibility of a lower hike in crude oil production from OPEC and Russia supported oil prices on June 18. Russia proposed a combined production increase of 1,500,000 bpd.

July WTI oil futures rose 1.2% to $65.85 per barrel on June 18. The Energy Select Sector SPDR ETF (XLE) increased 1% on the same day. The companies in XLE produce crude oil and natural gas, refine crude oil into fuels, and provide drilling and other energy-related services.

Cimarex Energy (XEC), Noble Energy (NBL), Newfield Exploration (NFX), and Apache (APA) account for 3.2% of XLE’s holdings. These stocks increased ~5.7%, ~3.4%, 3.1%, and ~3%, respectively, on June 18. These stocks were the top percentage gainers in XLE’s portfolio on June 18.

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Supply cuts  

OPEC and Russia agreed to reduce the crude oil production by 1,800,000 bpd from January 2017 to December 2018. Brent and WTI oil prices have risen ~68.1% and ~55% since June 21, 2017, partly due to current supply cuts.  

WTI crude oil prices have declined 9%, since May 21 due to the expectation of a rise in crude oil production from OPEC and Russia. According to Bloomberg, the crude oil production was originally expected to increase by ~1,000,000 bpd.

Meeting’s impact 

On June 14, Russia’s energy minister said that Saudi Arabia and Russia were interested in a gradual exit from ongoing supply cuts. Russia oil production rose in early June, while Saudi Arabia’s crude oil production rose in May.

On June 17, Iran said that ongoing production cuts should continue instead of increasing the production. OPEC’s meeting is scheduled for June 22. Any comments about a large increase in crude oil production from OPEC and Russia could pressure oil prices. However, a smaller-than-expected increase could support oil prices.

Next, we’ll discuss Russia’s crude oil production.


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