What drives oil prices up and which ASX stocks are benefiting?
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Shareholders of some ASX-listed oil producers can rejoice as oil prices hit multi-year highs today.
The value of black liquid is skyrocketing along with demand, as hopes that oil-producing countries could increase supply have faded.
Based on data from CBNC, the price of US West Texas Intermediate oil was up 0.2% to US $ 79.11 per barrel. Meanwhile, the price of Brent crude oil gained 1.3% to reach US $ 82.56.
Both oil prices have gained more than 4% since Friday’s close.
What drives oil prices up?
The main driver of oil prices this week is the Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC +.
On Monday, OPEC + announced that it would not further increase oil production despite rising global demand.
The increase in supply would of course make it possible to ease demand and fight against rising prices.
OPEC + had previously pledged to increase oil production by 400,000 barrels per day every month until all the oil held up during the pandemic was back on the market.
According to reports from Reuters, major oil customers, including India and the United States, had requested an increase in the amount of oil entering the market.
But OPEC + is said to be worried another wave of COVID-19 could see it oversupply the market again.
The Organization’s news comes about 6 weeks after Hurricane Ida halted oil production in the Gulf of Mexico, putting a heavy blow to the United States’ oil supply chain.
These ASX stocks soar with the price of oil
While rising oil prices are causing problems for some, this is good news for ASX oil producers.
Actions in Woodside Petroleum Limited (ASX: WPL) are doing well this week so far, jumping 5.5%.
The Santos SA The stock price (ASX: STO) has also taken off this week, gaining 4% since the close on Friday.
Finally, the Oil Search Ltd The share price (ASX: OSH) brings the rear to major oil producers, gaining 3.7% so far this week.