Oil prices are down about 3% on reports that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) is planning to further raise its crude production at a meeting scheduled for Sept. 7.
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OPEC+ has already raised its production by about 2.5 million barrels per day this year, raising fears of a supply glut amid a waning global economy and weakening energy demand. Analysts say that the oil cartel is under pressure from U.S. President Donald Trump to lower prices.
So far, the strategy appears to be working, with Brent crude oil, the international standard, trading at $67.65 a barrel, and West Texas Intermediate (WTI) crude, the U.S. benchmark, trading at $64 per barrel. Both prices are down more than 2% on the latest reports of yet another production increase. The rise in output from OPEC+ comes with U.S. oil production at a record high.
Swamping the Market
Commodities analysts also say that another output boost would mean OPEC+, which pumps about half of the world’s crude oil, would be starting to unwind cuts of about 1.65 million barrels per day, or 1.6% of world demand, more than a year ahead of schedule.
Eight OPEC+ nations are scheduled to hold an online meeting on Sept. 7 to decide on their October output. At their last meeting in August, the cartel raised production by 547,000 barrels per day for September, causing oil prices to sink.
The steady price decline has weighed on the share prices of oil majors such as Chevron (CVX), Shell (SHEL), and British Petroleum (BP).
Is CVX Stock a Buy?
The stock of Chevron has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on 10 Buy and five Hold recommendations issued in the last three months. The average CVX price target of $170.67 implies 8.02% upside from current levels.
Read more analyst ratings on CVX stock