Published on 11 Jul 2022 on Insider Monkey via Yahoo Finance
10 Oil Stocks to Sell Before Recession Begins
In this article, we discuss the 10 oil stocks to sell before the recession begins. If you want to skip our analysis of the outlook on the oil prices, go directly to the 5 Oil Stocks to Sell Before Recession Begins.
In a report issued by Citigroup earlier in July, analysts Francesco Martoccia and Ed Morse shared their stance on the fluctuations in oil demand. The analysts stated that the global crude oil prices could plummet to $65 per barrel by the end of 2022 and then further to $45 per barrel by the end of 2023 in case of a recession. The price forecast is made on the assumption that no production cuts will be made by the members of the OPEC+ in response to the plummeting prices and there would be a decline in oil investments. As of July 7, Brent crude futures was trading around $104.35, and the West Texas Intermediate (WTI) contract for August 2022 delivery was trading at $100.67 per barrel. The Head of commodity research at Citigroup, Mr. Ed Morse, has been cautious about the outlook of crude oil prices for the past few months. He thinks that crude oil is significantly overpriced right now and should trade around the $70 per barrel level.
In the past, OPEC members and its allies have intervened to avoid a significant dip in crude oil prices. In April 2020, at the peak of the COVID-19 pandemic, OPEC+ members reached an agreement to cut crude oil production by 10 million barrels per day (bpd), or nearly 10% of the global supply in one go. This was the biggest cut in production ever agreed between the notable oil producers of the world. The situation is different this time around as the Middle Eastern domiciled oil organization and its allies have started to increase crude oil production again and intend to raise it by 648,000 bpd in July and August. In the last two months, production has increased by 400,000 bpd to 432,000 bpd every month. The cartel will meet again on August 3 to decide the way forward.