Saudi Arabia hints at further reducing crude supplies, which is expected to add to the already-rising oil prices
There have been massive developments in global energy markets since last month due to high oil price environment. Amid all the happenings, Chesapeake Energy Corporation (NYSE:CHK) stock rose by 72 cents since the organization of petroleum exporting countries (OPEC) announced its decision on November 30.
The November 30 meeting of OPEC concluded with the decision to cap oil production levels and it simultaneously resulted in a boom for crude prices. The non-OPEC members have also started joining the oil supply-cut plan and oil prices have been responding to every new producer setting its production limit.
In latest news, oil prices jumped today when Saudi Arabia hinted at decreasing its supply even further. The country’s energy minister, Khalid Al-Falih, said on Saturday that they will “cut substantially to be below” the agreed target in the OPEC meeting. An agreement has also taken place between countries such as Russia and Mexico to come together with OPEC and cut oil supplies by 558,000 barrels a day next year.
The prices for West Texas Intermediate (WTI) Crude as of 3:11 AM ET have risen 5.36%, trading at $54.26. Similarly, Brent crude has crossed the $56 mark after rising 4.84% with a per barrel cost of $56.96. The prices are further expected to rise today following this news.
The implication for companies such as Chesapeake Energy will be beneficial in the short run considering that the rising oil prices will hike its stock price. The current price environment has resulted in a revival of investor confidence in the energy sector. On Friday’s session, the CHK stock gained 1.58% and closed at $7.72. Its 52-week high price stands at $8.15, which appears achievable if the same environment continues to exist.