OPEC

We can take the OPEC meeting in Vienna off the list of market concerns.  The Organization of the Petroleum Exporting Countries (OPEC) unofficially agreed to raise output by 1 million barrels per day (bpd).  Some members, such as Venezuela, Angola and Iran, may not be able to increase production leaving analyst to believe a more realistic production increase is closer to 600,000+ bpd.  Nigerian Energy Minister Emmanuel Ibe Kachikwu commented that supply was likely to increase by 600,000 to 700,000 bpd. 

Traders are worried that there is not enough oil to meet the increasing world demand.  On Thursday, Saudi Arabia Energy Minister Khalid al-Falih warned that the world could face “a deficit in the second half of this year of 1.6 to 1.8 million barrels.”

Prior to the OPEC, meeting President Trump attempted to persuade the OPEC cartel to increase production by tweeting:

 “Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!” 

West Texas Intermediate crude oil (WTI) is currently trading up about 3 % to $68.71, but it has traded in a range of $65.71 to $68.81.

The last Baker Hughes report on U.S. rigs showed a decrease of 7 total rigs to 1,052 from the prior week.  Oil was down 1 to 862 rigs, and it is the first decline in the past 12 weeks.  Oil rigs are up 104 from 758 in the prior year.

• Gas rigs -6 w/w, +5 y/y
• Miscellaneous -2 w/w, ++2 y/y

Markets    

Equity markets are mixed this afternoon.  The Dow is up 0.69%, the S&P 500 0.41% and the Nasdaq is down 0.11%.  Energy stocks are having a solid day on the back of the above OPEC news.  Energy stocks such as FANG, WLL, CXO and FTI are all up between 2% to 10%. 

Shippers are trading in a sea of green today (pun intended), with DryShips (DRYS) up close to 8%.  Consumer discretionary stock, CarMax (KMX) is up over 12% after reporting earnings this morning. 

Software application stocks were under pressure this morning after Red Hat (RHT) missed May billing estimates and lowered guidance.  Other stock in the sector, such as NOW, ADSK and CRM, have recovered off their lows as investors think RHT may be company specific.