Any relief for consumers from the 25% plunge in world oil prices since June was cut short by OPEC+’s decision on Monday to cut output by 100,000 barrels a day to support prices.
That saw Brent crude prices recover around 2.5% above US$95 a barrel, while US West Texas Intermediate crude jumped 2.3% to US$88.87.
The news should see a recovery today in the share prices of major Australian energy groups like Woodside, Santos and Beach, which will also benefit from a further spike in gas prices in Europe after Russia cut supplies to Western Europe. .
The overnight futures market saw a small gain of 8 points for the stock price index, indicating a soft open for the ASX 200 due to a lack of Wall holiday lead. Street.
More interesting, however, for local investors will be the new record for Australian thermal coal of US$465 per tonne on the ICE market in Newcastle on Monday evening. This is a 10% gain on the day from Friday’s near-record close of US$440 a tonne.
The gain will see investors chase local coal stocks like Terracom, Coronado, Yancoal and Whitehaven, not to mention BHP.
Thermal coal prices jumped after gas prices in Europe jumped 35% on Monday following the Russian shutdown, and as Swedish and Finnish governments bailed out power companies in the region because rising prices gas had pushed them to the brink of bankruptcy as demands for more collateral on futures contracts threatened to bankrupt the entire industry and collapse financial systems.
Sweden and Finland rolled out nearly $25 billion in bailout funding, a move that also eased pressure on the Nasdaq clearing market in Stockholm, which handles energy and other transactions in the region. The US parent company of the Stockholm stock exchange has made it clear that it supports the measures taken by governments and said it stands ready to help.
OPEC and its allies, led by Russia, agreed Monday to a small production cut of 100,000 barrels a day.
They’ve scheduled the next OPEC+ meeting for Oct. 5, but the group said it could meet anytime to adjust production before then, essentially giving its Saudi president the power to deal with the crisis. market changes whenever the need arises.
Reuters said this flexibility would extend beyond October.
“Members have confidence that the president can step in whenever needed to bring more stability and that can go beyond October until the end of the (OPEC+) deal,” the source said.
OPEC has been watching growing weakness in oil prices in recent weeks, and the Saudi leader warned last month of the possibility of production cuts to offset what he sees as an exaggerated drop in oil prices.
Monday’s drop represents just 0.1% of global demand and will be offset in the coming weeks by increased production in the United States, which is now the world’s swing producer.