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Energy stocks surge on speculation that the oil price war may soon end

'Buy the rumour, sell the news,’ so the saying goes.

Oil prices rebound

Oil markets climbed overnight off the back of news that Saudi Arabia and Russia’s oil price war may soon come to a close.

Centrally, as CNBC yesterday reported:

‘Oil prices skyrocketed on Thursday after President Donald Trump told CNBC Saudis and Russia will ease pressure on oil, ending a price war that has contributed to crude’s massive plunge.’

US President Donald Trump – elaborating on how such events may play out in practical terms – yesterday tweeted:

‘Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels.’

In typical Trump fashion, he even noted that these production cuts could run as deep as 15 million barrels.

In response to this speculation, oil markets rose aggressively: yesterday West Texas Intermediate futures (WTI) peaked at a little over US$25 per barrel; while Brent Crude futures traded closed to US$30 per barrel at its intraday high, according to Bloomberg Data.

Of course, it should be noted that neither Saudi Arabia nor Russia have yet to come to any sort of production cut agreement; though they have agreed to hold an emergency OPEC+ meeting.

The specific timing around this OPEC+'s emergency meeting remain uncertain.

Santos, Oil Search and Woodside share prices rise

In a classic case of ‘buying the rumour’ – ASX-listed gas and oil stocks traded bullishly at the open today, with Oil Search up as much as 21% at one point.

However, these key ASX energy stocks gave up some of these gains by the afternoon: at the time of writing, the Santos share price stood at $4.23 per share; Woodside Petroleum traded at $20.02 per share; and Oil Search – trading at $2.82 per share (up a still impressive 8%) remained the second best performing ASX 200 equity, as of 13:54 AEDT.

Mind you, as we wrote on Monday and citing ING research:

‘Even if Russian and Saudi Arabia can come to a production cut agreement, ING notes that it would “still likely not be enough to bring the market back to balance”.’

Adding to this, oil markets have pulled back in the last 24-hours: WTI futures last traded at US$24.36 per barrel (-3.79%); while Brent Crude futures traded some 2.17% lower, to $29.29 per barrel, according to Bloomberg Data.

How to trade energy stocks

What do you make of these new developments: are you bullish or bearish on oil? Whichever way you lean, you can use IG’s world-class trading platform to trade some of the key ASX-listed energy stocks we have discussed today – both long and short.

For example, to buy (long) or sell (short) Woodside Petroleum using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘WPL’ or ‘Woodside Petroleum' in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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