Oil Prices on the Rise for Sixth Consecutive Week


Oil prices are continuing their upward trajectory, experiencing their sixth consecutive weekly gain—the longest winning streak in over a year. The recent surge in prices can be attributed to Saudi Arabia’s commitment to further reducing its production well into the fall. Moreover, signs indicate that oil demand is finally surpassing supply.

This notable increase has been beneficial for oil stocks, which had been trailing behind the broader market throughout the year, despite performing well in both 2021 and 2022. The SPDR S&P Oil & Gas Exploration & Production exchange-traded fund (XOP) has seen a 13% increase over the past year, following a period of stagnant trading just a month ago. In fact, certain oil and gas producers, like Denver-based Ovintiv (OVV), have fared even better. Ovintiv surpassed earnings and revenue expectations for the second quarter, leading to a remarkable 29% stock surge in the past month. Larger energy companies, known for their diversification, typically experience a limited boost from rising prices. For instance, Exxon Mobil stock (XOM) has only risen by 1.9% in the past month.

Saudi Arabia recently announced its intention to continue withholding an additional one million barrels per day of oil production until at least September, and potentially longer. Simultaneously, Russia plans to reduce its production cut to 300,000 barrels in September from the 500,000 barrels reduced in August. Overall, these announcements have had a positive impact on crude oil prices.

RBC Capital Markets analyst Helima Croft highlights Saudi Arabia’s ongoing efforts to instill confidence in the market, stating, “Once again, Saudi Arabia is seeking to put market skeptics on notice.” Consequently, Brent crude, the international benchmark, experienced a 1.3% advance on Friday alone, reaching $86.24 per barrel and marking yet another weekly gain.

In addition to these developments, the United States reported a rapid decline in oil storage levels, with inventories shrinking by a record-breaking 17 million barrels in the latest week. This decrease confirms that demand is rapidly surpassing supply. As a result of the rising prices, the Biden administration canceled its plan to purchase six million barrels of oil for the strategic petroleum reserve.

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