With the resolution of a disagreement between Saudi Arabia and the United Arab Emirates, an OPEC + deal to increase production was sealed earlier this week. Following the agreement, oil prices have fallen by approximately 8%. Because declining global demand could cause oil prices to fall further, we believe Chevron (CVX), Pioneering natural resources (PXD), Phillips 66 (NYSE 🙂 and Valero Energy (VLO), which trade at expensive valuations, could soon experience a price drop. Let’s discuss. On July 18, OPEC + announced plans to increase production by 400,000 barrels a day starting in August, after a week of internal conflict. The projected increase in supply, coupled with a decline in market demand amid a slowing economic recovery and growing concerns regarding the rapid spread of the COVID-19 Delta variant, have caused oil prices to fall lately.
West Texas Intermediate crude futures fell below the critical $ 70 level on July 19. Oil prices in the United States closed at $ 66.42 a barrel on the same day, hitting a 10-month low. The gradual easing of supply restrictions is expected to continue to put pressure on oil prices.
Oil prices are expected to continue to decline in the short term due to the slowdown in global demand with the resurgence of COVID-19 cases in several countries. Against this backdrop, oil stocks Chevron Corporation (NYSE :), Pioneer Natural Resources Company (NYSE :), Phillips 66 (PSX) and Valero Energy Corporation (NYSE :), which are currently trading at high valuations, could experience a pullback early. . Therefore, we believe that it is better to avoid these actions now.
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