Oil prices are retreating from historic gains after Saudi Arabia successfully restored 50% of crude production loss following the weekend drone attack on the kingdom’s oil facilities. With roughly 3% of the global oil output back online and earlier than expected, the S&P 500 energy stocks were among the worst losers following Monday’s big rally.
Oil Price Plummets
The West Texas intermediate (WTI) oil has declined nearly 6% in a session to $59.34 per barrel. This reflects extreme crude volatility as price of the commodity fell drastically immediately after the session when oil marked its largest one-day increase in 10 years.
Prince Abdulaziz bin Salman, the energy minister of Saudi Arabia, announced that production capabilities of crude have been completely restored. He stated that by the end of September 2019, oil production from the facilities will return to a level before the week-end strike. The news primarily caused the crude price to fall.
The energy minister also said that the facilities will be producing at a rate of 10 million barrels per day (B/D) by the end of September and 12 million B/D by November-end.
Energy Stocks are Losing
The fate of all upstream energy players is positively correlated with crude prices. Hence, explorers and producers will be less inclined to increase oil production following the slump in the commodity’s price. Moreover, lower exploration activities will lead to reduction in the number of contracts for drillers and oilfield service players.
The major losers among the upstream energy companies are Apache Corp.(APA - Free Report) , Marathon Oil Corp. (MRO - Free Report) , Devon Energy Corp. (DVN - Free Report) and Hess Corp. HES. The stocks declined 8.5%, 7.8%, 5.1% and 3.5%, respectively.
Moreover, shares of Halliburton Company (HAL - Free Report) — a leading oilfield service firm — fell 6.5%. Shares of Transocean Ltd (RIG - Free Report) — a major offshore contract driller — declined 7.5%. The stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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