Upstream space might see upside
On November 2–9, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 0.6%—the least among major energy ETFs. US crude oil prices just above $60 and a fall of 4.7% last week due to supply concerns might have either dragged or limited the upside in upstream energy stocks. However, Saudi Arabia’s announcement on November 11 about reducing its exports by half a million barrels per day in December might bring a small pause to oil’s fall.
Natural gas might support upstream energy stocks
Natural gas futures rose to $3.71 on November 9—the highest closing level since December 30, 2016. Natural gas prices increased 13.2% in the week ending on November 9, which might support upstream energy stocks amid oil’s decline last week.
According to Reuters, for the next two weeks, Refinitiv analysts have increased the total degree days from 365 on November 8 to 369 on November 9 in the Lower 48 US states. The increase might result in higher natural gas use for heating than previously expected, which could boost natural gas this week. The total degree days are also higher than the 30-year average of 282 for these weeks.
In the next part, we’ll discuss the top gainers on our list of upstream stocks.