Market News #32 - Jan 31 – Feb 4 | Can Oil Return to Pre-Pandemic Levels? 🗞

According to data from the International Energy Agency (IEA), the supply of oil will soon exceed demand. Indeed, many oil producers are pumping at historical levels. On the flip side, demand is holding up despite the spread of omicron, which isn’t as severe as expected.
Under these conditions, the price of oil could stabilise with a better supply-demand balance. And that could slow down the rising price of oil. It’s a tricky balance to understand! This week, we’re bringing you news about the most important events that could impact the price of black gold.

OPEC takes stock of oil :oil_drum:

On Wednesday, February 2nd, the Organisation of the Petroleum Exporting Countries (OPEC) and its partners will host the 24th ministerial meeting. They’ll discuss questions of supply and demand, and whether the balance needs adjusting in the context of economic recovery. For the year 2022, OPEC is maintaining its general forecasts with demand expected to increase by 4.15 million barrels per day.

However, three things could get in the way for OPEC:

  • If inflation continues to soar, it could bring a rise in fuel prices. Some analysts think the cost of oil could exceed the $100 per barrel mark in 2022.
  • The geopolitical climate in oil-producing countries is particularly tense and may interrupt production. This is the case in the Gulf region, Libya and Angola. The situation is also tense in Ukraine which is currently under threat of a Russian invasion.
  • There’s currently a big production gap between different countries. OPEC is having difficulty controlling the output from some nations which is an essential factor in the supply-demand balance. In simple terms, OPEC member states shouldn’t over-produce to compensate for the lack of production in others.

OPEC will face questions on these three points. They’ll have to explain what measures they’ll use to keep the oil balance steady in 2022.

Which oil companies will report earnings? :money_with_wings:

This week, we’ll also get quarterly figures from three major oil companies in the sector. ExxonMobil kicks things off on Tuesday, February 1st. The company recently announced that higher gasoline prices could boost profits with an increase from $700 million to $1.1 billion in the fourth quarter compared to the third. The share price is up 48% year-on-year.

ConocoPhillips is the second company to watch this week, and analysts are very bullish on the numbers! The Alaska-based company is expected to report earnings of $2.17 per share on Thursday, February 3rd. That would be a year-on-year growth of 1,242%. The most recent revenue estimates predict quarterly revenue of $14.39 billion, up 138% from the same period a year earlier.

Lastly, keep your eye on Shell, whose share price has risen 28% over the past six months. Additionally, the company has begun a share buyback strategy which typically benefits investors. Shell also announced an investment of $4 billion in France to develop ‘future energies’ as part of the company’s energy transition. The quarterly results will be revealed on Thursday, February 3rd.

Stay up to date with the latest news events :newspaper:

Keeping up to date with major market events will help you make better investment choices. That’s why we’ve just added a brand new feature in the BUX Zero app: the financial calendar. It lists all the upcoming ex-dividend dates, as well as quarterly earnings in the week ahead. Go check it out!

Economic calendar and results :calendar:

Monday – GDP growth in Austria and the eurozone (Q4). Forecast inflation rate in Spain and Germany (January). Quarterly figures from Otis Worldwide, KPN, Alexandria, L3Harris.

Tuesday – Forecast inflation rate in France (January). PMI manufacturing index in the euro zone and in France (January). Unemployment rate in the eurozone (December). Quarterly figures from Alphabet, Christian Dior, PayPal, ExxonMobil, Starbucks, General Motors, Electronic Arts, Gilead.

Wednesday – Fiscal balance in France (December). Forecast inflation rate in Austria and the euro zone (January). Unemployment rate in Ireland (January). OPEC meeting. Quarterly figures from Alibaba, Qualcomm, T-Mobile, Santander, eBay, Spotify.

Thursday – Eurozone, Germany, France and US Services PMI (January). Decision on interest rates by the ECB. Quarterly figures from Amazon, Shell, Honeywell, Siemens, Dassault, Infineon, ConocoPhillips.

Friday – Industrial production in France (December). US unemployment rate (January). Quarterly figures from Sanofi, Vinci.

Interesting to read :books:

BUX Broadcast #40 | Eerste hulp bij een beursdip :netherlands:

BUX Börsenausblick #31 | Was tun bei volatilen Märkten? :de:

Are your excited for the oil companies reporting their earnings? :thinking:

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We’ll be back next week with another edition of the Market News. In the meantime, have a great week on the markets! :wave:t4:

All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.

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