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Oil Soars on OPEC+ Surprise: Energy Stocks Post Big Gains

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U.S. crude prices rose by more than 4% on Thursday, and rallied to 23-month highs. The contract’s multiyear peak came after major oil producers maintained their output cuts till the end of April contrary to expectations of a slight increase. The OPEC+ alliance will continue withholding production by around 7 million barrels per day (or about 7% of the global consumption) through next month. Moreover, OPEC-kingpin Saudi Arabia pledged to extend its voluntary supply curbs of 1 million barrels per day.

The group’s reluctance to raise output helped the American benchmark gain $2.55 to end the day at $63.83 per barrel — hitting its highest since April 2019. Meanwhile, the international Brent crude futures settled at $66.74 per barrel, up $2.67, or 4.2% from their last close.

Oil Markets Bull Story Continues

The OPEC+ coalition’s production restraint is not the only factor supporting the oil markets. The energy space has been rallying for the past few months on continued vaccine-related developments and their successful deployment around the world that offer hope for an earlier-than-expected pickup in the commodity’s demand. Crude has been driven up further by easing coronavirus infections, signs of robust demand in the world’s second-largest oil consumer, China, and the passage of the $1.9 trillion stimulus bill.

The renewed enthusiasm can be gauged from the fact that the Zacks Oil/Energy sector has gained 32.2% in the past six months, handily outperforming the S&P 500 Index’s 12.3% appreciation.

 

 

Energy Stocks Take Off

The OPEC+ surprise pushed the Energy Select Sector SPDR — an assortment of the largest U.S. energy companies — up around 2.4% on Thursday to be at the top of the S&P sector standings. In fact, except for Energy, all the other S&P 500 sectors were in the red yesterday.

As a matter of fact, the top five gainers of the S&P 500 on Thursday were all energy firms — Diamondback Energy (FANG - Free Report) , EOG Resources (EOG - Free Report) , Marathon Oil (MRO - Free Report) , Apache (APA - Free Report) and Hess Corporation (HES - Free Report) . Diamondback — carrying a Zacks Rank of #1 (Strong Buy) — was the top-performing stock with a gain of 9.16%, followed by EOG (6.63%), Marathon Oil (6.28%), Apache (5.37%) and Hess (4.66%).

You can see the complete list of today’s Zacks #1 Rank stocks here.

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