Oil prices were lower Friday ahead of next week’s OPEC meeting after reports that it would be unlikely for OPEC to reach an agreement at the organization’s informal meeting to be held at the International Energy Forum in Algeria. OPEC will begin meeting over the weekend and continue discussions throughout the week. Primarily in focus will be cooperation between Saudi Arabia and Iran. Saudi Arabia has reportedly suggested it would reduce its output if Iran would also agree to lower its production.
Oil inventories are currently at their lowest level for 2016. On Wednesday the Energy Information Administration reported a decrease in total inventory of 6.2 million barrels for the week. Weather in the Gulf of Mexico has also contributed to the lower current inventory level.
While inventory was lower, Friday’s rig count report showed oil rigs increasing by 11 for the week. In the U.S. the rig count increased by five and in Canada the rig count increased by six.
Brent crude oil fell 3.70% on Friday to $45.89, ending the week nearly where it began at $45.26. WTI crude oil was also down on Friday, falling 3.97% to $44.48. WTI crude was just slightly higher for the week after beginning the week at $43.04.
Energy stocks were also lower ahead of the OPEC meeting. On Friday, S&P 500 energy stocks were down 1.33% led by losses from Denbury Resources (DNR, Financial), Transocean (RIG, Financial) and Devon Energy (DVN, Financial).
In the energy sector, investors will also be watching Exxon (XOM, Financial). Regulators are investigating their reserve valuations and it seems their negative cash flow could result in a dividend decrease. Overall market specialists see energy sector stocks going lower and this week will be important for momentum.
Disclosure: I do not own any stocks included in this article.
