OPEC held a scheduled meeting last week and, for the first time in a while, actually came to an agreement. Details are sparse, but a production cut seems imminent.
In this week’s episode of Industry Focus: Energy Opens a New Window. , host Sean O’Reilly and analyst Taylor Muckerman explain how much oil OPEC is planning to cut compared to the daily global production total, what we might expect to see in the next few months, how Goldman Sachs(NYSE: GS)is looking at the price of oil in the next few years, and more.
Also, the duo examines why, according to EIA data, Americans used a record-breaking amount of gas this August, and why Enbridge (NYSE: ENB) is on their radar this week.
Here’s a full transcript of the video.
Sean O’Reilly: Welcome to Industry Focus, the podcast the dives into a different sector of the stock market every day. Today is Thursday, Sept. 29,2016, so we’re talking about energy, materials, and industrials. I’m joined in studio by The Motley Fool’s very own Taylor Muckerman, who I am extremely anxious to talk with about yesterday’s big news. Stop the presses: OPEC agreed to, on a preliminary basis, cut production. What?!
Taylor Muckerman: Yeah, that’s what they said. There’s no details.
O’Reilly: There were a few, to be fair.
Muckerman: Well, there are estimates.
O’Reilly: Let’s take a step back. OPEC surprised everybody yesterday, sent oil up 5 percent to 6 percent. They had been talking down these discussions in Algiers for one or two weeks. “We want to cut, but this is just preliminary, we don’t expect to decide anything.” Russia and Iran talked it down, Saudi talked it up. It’s a little verbal chess game. Then,yesterday [it] hits the wires that they agreed to a preliminary cut. Details are going to be announced in a month.
Muckerman: Nov. 30.
O’Reilly: The symmetry there is pretty funny. That date, two years ago …
Muckerman: That’s their bi-annual meeting, it happens in November. That year, it was Nov. 24.
O’Reilly: So, right before Thanksgiving, they were like, “Yeah, we’re not going to do anything,” and oil plummeted. And here we sit two years later.
Muckerman: People were cooking their turkeys by the oil drum fires in 2014.
O’Reilly: Because it was so cheap.(laughs) But, correct me if I’m wrong, they’re talking about, in a month, agreeing to actually setting firmly about a 750,000-per-day barrel decrease in supply.
Muckerman: That’s what an Iranian representative suggested. But if you look across the board, there’s a lot of people that aren’t quite sure it’ll even reach 0.5 million barrels per day. But even if it was 700,000 barrels a day —
O’Reilly: Or five.
Muckerman: Either way, that’s only 0.7 percent of global oil production. It’s not a huge earth-shattering thing. What is the big deal is that OPEC countries have…
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