How and why OPEC makes Eni and Saipem gush on the stock exchange
Opec plus reaches agreement on increasing oil production. And the sector celebrates on the stock exchange. The numbers at Piazza Affari of Eni and Saipem
From 2021, Opec Plus oil production will start to increase again. Gradually. From January, 500,000 barrels a day will arrive on the market. The agreement found, with difficulty, between the producing countries makes the crude oil sector run to Piazza Affari and other European markets.
All the details.
THE COMPARTMENT SPRAYS IN THE BAG
Let's start with the immediate consequences. The crude oil sector recorded important “+” signs on the stock market. The sector index is the best in the Old Continent: Euro Stoxx 60 Energy + 2.43%.
Individual stocks also performed well. At the time of writing (3 pm), Eni recorded a plus 2.7% in Piazza Affari, while Saipem also reached plus 4% and Tenaris + 2%. Royal Dutch Shell stands out in the square of Amsterdam, with + 2.49% (again at 15.00), and BP, in London, travels over + 3%.
THE OPEC + AGREEMENT
The joyful gush is due to the reached agreement on production between the oil producing countries adhering to OPEC plus (OPEC countries and third countries led by Russia). From next year, Covid emergency or not, production will rise again. No extension, therefore, of the current cuts (7.7 million barrels per day) for the first months of 2021.
GRADUAL INCREASE
But also no strong production increase invoked by some countries. The increase, in fact, will be gradual. In January, the increase in production will be of only 500 thousand barrels per day of crude oil and not 1.9 million barrels as foreseen by the plans drawn up last spring.
CONTINUOUS PLENAR VERTICES
In the months to come, the increase in production will grow, but always gradually and the stages will be established in continuous plenary summits between the OPEC plus countries: one meeting per month has been set for the first quarter of 2021.
The objective, explains the Russian Alexander Novak, is to be ready “for positive and negative factors, because the adjustment can be done in both directions”.
THE BLESSING OF THE ANALYSTS
The agreement, reached with many difficulties due to the obstruction of the United Arab Emirates, which have not digested the behavior of Russia and Iraq in recent months, has received the blessing of analysts.
“After very tense negotiations, the worst case scenario investors feared was averted,” analysts at Rystad Energy said.
“The new agreement has positive short-term implications for the Brent price as it eliminates, at the moment, the risk of a significant increase in output, even if the problems related to discarding still remain,” write the Equita analysts.
“There are strong contrasts with an uncertain balance in the coming months. Following the appointment of Joe Biden to the presidency of the United States, there are also the risks of a return of Iranian and Venezuelan supplies ”, adds Equita.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/come-e-perche-lopec-fa-zampillare-eni-e-saipem-in-borsa/ on Fri, 04 Dec 2020 14:35:52 +0000.