What Happened To Oil Prices Today In The Stock Market

What Happened To Oil Prices TodayWhat happened to oil prices today?  If you EVER wanted to make money, you will want to know the answer to this question.  It seems that the world is tired of giving away all that black gold for absolutely pennies on the dollar.  That is where Saudi Arabia and Russia steps in.  Nothing like having old friends come together in order to manipulate world markets for their own benefit.  Just beware because tomorrow you are going to see these stocks give up a bit of their gains.  How many times have you watched stocks go crazy and then the next day give much of that back.  If this is the beginning of huge oil gains, it will begin on Thursday and not Wednesday.

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What happened to oil prices today, well that all starts with Russia and Saudi Arabia agreeing to free current levels of oil production.  They have also agreed to work together in helping to raise oil prices now and into the future.  The problem is that they are only freezing their current production levels and not dropping them.  Having Saudi Arabia and Russia agree to drop production by a percentage would have had HUGE impacts on oil prices and you would have seen oil stocks go thorough the roof.  (Not that you didn’t see that today anyways)  There are many reasons for oil to go back down in price, but also, just as many reasons for it to rise.

One of the main things you will see coming from these two countries is an agreement to lower levels of oil production in order to limit price declines and induce future price increases.  Let’s take a look back in time to see what will happen when the Saudis decide enough is enough.  Back during January 17th, 2001, the powers of OPEC agreed to drop oil production by 1.5 million barrels per day.  Why did they do this?  They were tired of prices dropping and wanted to some increases.  You can see the chart below, based on information from Joint Organisations Data Initiative.  When you see the two largest producers agree to limit oil, this can lead to some huge price jumps.  Now we have a great idea of what happened to oil prices today AND for the next few weeks as they announce their plans.  What’s worse is if Iran decides to jump into the mix and work beside them in helping to manipulate prices to higher levels.

What Happened To Oil Prices Today

What Does This Mean For Oil Stocks?



At this time, you can already get a sense of what this means for oil stocks.  You can just look at a handful of oil stocks and see that this limiting will greatly increase their share prices rapidly.  Some of these companies have been holding on by a thread to solvency and this may just be the medicine the doctor ordered.  Increases in per barrel price of crude could not just save them from bankruptcy, but bring some companies back to the land of profit.  Take a look at the following 2 stocks for example.

SDRL $3.81 – Up 23.7% today based on a single headline.  In other words, this stock could explode again if the right news is released in the next few weeks or prices continue to rise.  I will be short and sweet with this one.  I put a bottom for this stock around $2.95 a share.  That means you could possibly lose around 25% of your investment, but I truly believe you are going to see this stock rebound more as prices start to rise or better news hits the wires.

MRO $13.12 – Up 12.43% today and enjoying a nice 90% gain since Feb 19th.  You read that right my friends, they are up almost 100% in only 8 weeks.  This is the kind of stock you want to pay VERY close attention to during times like these.  If you are looking for bigger gains, then these are the kinds of plays you will want to consider.



So what are to expect going forward?  This is a tough case of trying to figure out what all these countries are going to say next.  I would go out on a limb here and guess you are going to see a bit of a pullback tomorrow, just because these stocks where hugely higher on the news.  I can tell you that we have added a few oil stocks to the portfolios, including the two above.  We are expecting to continue to hear tails of freezes and even cutbacks in oil production and this will give these stocks about 3 to 4 times the energy increase or decrease, depending on the news of the day.  So what happened to oil prices today?  Same thing that will happen every time the Saudis and Russians announce anything about cutting production.

What Happened To Oil Prices Today

Comments

  1. Bill Simmel says:

    You are right on with the oil. One news article with either Russia or Saudi Arabia cutting oil and the prices will sky rocket. I am interested in seeing how Iran comes to the table on Sunday. Will be an interesting Monday.

    • Stock Moe says:

      Monday will be big for oil, one way or another. I am long oil, so hoping for some positive news. Thanks for writing…Moe

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