Will OPEC Wednesday meeting be beneficial for the future of oil prices?
Chesapeake Energy Corporation (NYSE:CHK) performed well in the market after the presidential election of 2016. The stock has followed the upward trend because of pro policies of Donald Trump for energy companies and the expectation of OPEC to cut down oil supply. The energy giant has followed a similar price movement as compared to oil prices.
Oil prices have been falling for the past few days ahead of the November 30 OPEC meet. The oil prices have been falling in fear that the OPEC countries will not reach an agreement to reduce oil supply, which can lead to an increase in prices. The Brent Crude futures as of 0749 GMT traded 0.74% lower, while per barrel price fell down to $46.89. The prices fell almost 3% on Friday upon a disagreement between the oil producing nations on who will cut oil production and by how much.
Energy minister for Saudia Arabia, Khalid al-Falih, said on Sunday that the oil market can balance itself in 2017 even if the producers do not interfere and that the current levels of output will be justified. This points to a possibility of disagreement and that no deal may be struck in the Wednesday meeting. Saudia Arabia has refused to attend the meeting due today as it said that the OPEC has not reached an internal agreement.
Morgan Stanley expects that there will be a paper deal signed in the upcoming meeting. The agreement, if reached, will still not guarantee a supply cut soon enough, as producers trade supplies ahead of at least 2 months.
The energy giant stock prices fell by 0.75% in the last session and closed in at $6.59. The prices can be expected to decline further in the upcoming sessions leading to the meeting as uncertainty prevails in the market.