Oil prices are sliding lower as tensions in the Middle East ease and the OPEC+ cartel agreed to increase its production starting in August.
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An eight-nation subset of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to lift production by a greater-than-expected 548,000 barrels per day in August. The group includes Russia and Saudi Arabia, along with Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates.
Those countries have been unwinding 2.2 million barrels per day of voluntary production cuts, which are separate from the wider OPEC+ strategy. Brent crude oil, the international standard, is lower at $68.30 per barrel, while West Texas Intermediate (WTI) crude oil is down 0.75% at $66.50 a barrel. OPEC+ was expected to raise its output by 411,000 barrels per day at its policy meeting on July 5.
China Factor
Another factor weighing on crude oil prices is demand in China, which is the world’s biggest oil importer. Currently, demand in China is at its lowest pace in nine months as new export orders fall. In the U.S., a surprise build-up of crude oil inventories also highlighted demand concerns in the world’s biggest energy consumer.
U.S. oil drillers in recent days have cut the number of rigs they’re operating by seven to 425, their lowest level since September 2021. Energy traders say the current situation is conspiring to push crude prices lower in the near-term, a situation that many forecast will continue throughout the summer and into autumn.
The current price decline is dragging lower stocks of oil majors such as Chevron (CVX), Shell (SHEL), and Occidental Petroleum (OXY).
Is CVX Stock a Buy?
The stock of Chevron has a consensus Moderate Buy rating among 18 Wall Street analysts. That rating is based on 10 Buy, six Hold, and two Sell recommendations assigned in the past three months. The average CVX price target of $159.67 implies 7.62% upside from current levels.
