| OPEC and Russia Are Considering a Long-Term Relationship to Maintain Their Grip on the Oil Market | |
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Over the years, Russia and the members of OPEC have worked together in times of crisis to help stabilize the oil market. The most recent cooperation began in late 2016, when OPEC and several other oil-producing nations, led by Russia, agreed to reduce their production rates for six months to help drain off some of the market's oversupply. The parties agreed to extend that agreement twice, with the current one lasting through the end of this year. There have been talks between these two groups to extend this agreement even further since their co-operation has helped lift the price of crude from less than $50 a barrel to nearly $70 in the past year and a half. Notably, the group is now discussing an alliance that would last much longer, potentially for the next 10 to 20 years, according to a recent report by Reuters. Image source: Getty Images. What this means for oil stocksRussia and OPEC until we see what's in the agreement. However, more than likely it will set production caps for each country designed to prevent them from pumping too much crude and upsetting the balance between supply and demand. That would, in theory, make oil less volatile and could cause prices to flow higher in the coming years." data-reactid="64">As they say, the devil is in the details, so it's hard to know what to make of this potential long-term alliance between Russia and OPEC until we see what's in the agreement. However, more than likely it will set production caps for each country designed to prevent them from pumping too much crude and upsetting the balance between supply and demand. That would, in theory, make oil less volatile and could cause prices to flow higher in the coming years. A more stable oil-market environment would be a dream scenario for U.S. oil producers. Most have been banking on a far more volatile oil market, and many have driven down their operating costs so that they can thrive at less than $50 a barrel. At that oil price, leading U.S. producers Anadarko Petroleum (NYSE: APC) and EOG Resources (NYSE: EOG) can generate enough cash flow to reinvest in the wells that would boost their oil output by 14% and 18%, respectively, this year. With oil well above that level, both companies can generate excess cash. EOG Resources is on pace to produce $1.5 billion in free cash this year at $60 oil, while Anadarko could generate more than $1 billion at that price point. Those numbers would keep rising along with crude prices, giving both more cash to pay higher dividends and, in Anadarko's case, repurchase more stock. Those increasing cash returns could reward investors richly in the coming years. Lifting the floorRussia and OPEC have joined forces in the past to solve market-supply problems, and now it appears that they'd like to keep their relationship going to prevent future ones. An extended agreement could remove one of the risks in the oil market, potentially pushing crude prices even higher. That scenario could fuel windfall profits for U.S. producers that banked on prices staying much lower for a lot longer, setting oil stock investors up to possibly make a mint in the coming years." data-reactid="67">Russia and OPEC have joined forces in the past to solve market-supply problems, and now it appears that they'd like to keep their relationship going to prevent future ones. An extended agreement could remove one of the risks in the oil market, potentially pushing crude prices even higher. That scenario could fuel windfall profits for U.S. producers that banked on prices staying much lower for a lot longer, setting oil stock investors up to possibly make a mint in the coming years. More From The Motley Fool Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. |
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EOG Resources
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CODE : EOG |
ISIN : US26875P1012 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
EOG Res. is a and oil producing company based in United states of america. EOG Res. is listed in United States of America. Its market capitalisation is US$ 72.4 billions as of today (€ 65.2 billions). Its stock quote reached its lowest recent point on July 11, 2003 at US$ 10.00, and its highest recent level on September 19, 2024 at US$ 125.20. EOG Res. has 578 636 343 shares outstanding. |