- Shares of companies tied to the oil sector rose after OPEC + agreed to gradually ease production cuts, signaling a bullish outlook for global demand.
- The energy sector fund XLE rose 3%, while some oil exploration & production companies rose as much as 12%.
- Oil prices also neared two-year highs on Tuesday.
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Shares of companies tied to the oil industry rose on Tuesday after OPEC+ agreed to gradually ease production cuts and Saudia Arabia’s energy minister signaled a bullish tone about the global recovery.
At a meeting on Tuesday, the group confirmed its plan to continue to raise production only gradually over the coming two months, implying no change in their current policy.
“The demand picture has shown clear signs of improvement,” Saudi Energy Minister Prince Abdulaziz bin Salman said at the meeting, according to Bloomberg News.
The news that supply will only rise slowly pushed the Energy Select Sector SPDR Fund (XLE) over 3% Tuesday. Exxon Mobil rose as much as 3.9%. Exploration and production companies climbed, with Marathon Oil Corporation and Devon Energy Corporation both climbing over 12%. Pioneer Natural Resources gained 5%.
The energy sector has outperformed the S&P 500 and is the best performing sector in the last month and in all of 2021. XLE is up about 42.4% year-to-date, compared to the S&P 500’s gain of nearly 12%.
Bullish news from OPEC+ also lifted oil prices near two-year highs on Tuesday. Brent crude was trading around $70.17 per barrel at 12:51 p.m. E.T. Tuesday was the first time prices have risen above the $70 mark since March.
OPEC and its non-OPEC partners agreed to stick to the plan first made in April, where 2.1 million barrels per day of supply will be brought back to the market by July, Bloomberg said.
Fundstrat’s Tom Lee said the energy sector is his top sector pick, and one that is a “contrarian” group given widespread skepticism from Wall Street.