Last week we talked about oil & how it’s been moving a lot in the last few weeks after OPEC and its allies voted to pass an output policy for the remainder of the year regarding the amount of oil entering the market. OPEC concluded to increase the output of oil essentially meaning an increase in supply. Moreover, last week we saw oil prices drop around 4%, mainly in reaction to China’ contracting levels of factory activity, challenging the demand for oil. With demand for oil in question and the supply of oil confirmed to keep rolling in – it’s really no surprise that the price of oil fell. Today, however, one of the biggest oil companies in the world (Saudi Aramco) that’s based in the city of Dhahran in Saudi Arabia, saw major gains.
In fact, according to CNBC the company reported a massive 288% increase in net income to $25.5 billion for the second quarter, while maintaining its dividend of $18.8 billion. This showed how despite the news of last week, in the bigger picture, big oil has benefited from a recovery in worldwide demand. To reinforce these results with confidence, President and CEO Of Aramco made his position on sizeable hurdles such as the COVID variants clear, stating: “While there is still some uncertainty around the challenges posed by Covid-19 variants, we have shown that we can adapt swiftly and effectively to changing market conditions,”. Do you agree with the CEO? Or will the bullish trend of oil prices be in jeopardy going forward?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.