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Energy stocks mixed as China demand looks supportive of oil prices

Yahoo Finance's Jared Blikre discusses the latest news in the energy markets.

Video transcript


- All right, well, now let's head over to Jared Blikre, with what's shaking up in the oil market. Hey, Jared.

JARED BLIKRE: Well, we got some big news over the weekend here. We're looking at the energy board for today. It is a mixed market. I just want to show you what's happened over the trailing month.

Now, we do see still a mixed market. And let me go to the futures so I can show you where the selling has been concentrated over the last month in some of the energy names. Heating oil, off 20%. RBOB gasoline, off 16. Crude oil, down 13%.

And without further delay, the news overnight, is that OPEC Plus is standing, Pat. There was some discussion. They might actually cut their production a little bit to support prices.

We see WTI crude futures are right around $80 per barrel. Now, this is an intraday look. But I want to show a longer term price chart here. This is 20 years. Now, $75 per barrel just coming off of those prices.

This is a key price that has been in play over the last several decades. Forgive the line. It isn't exact.

But it basically splits this huge range you've seen here into two different ranges. And $75 per barrel on the lower end, maybe $125, $130 on the upper end. And this means that, if price is able to rebound from here off of the news over the weekend, well, and especially on some of that demand, or demand increasing out of China, as they relax the restrictions, that would be very supportive of crude oil prices.

Also, along those lines, we have seen the premium that is put on the near month crude oil futures come down considerably. And as China now gradually relaxes their restrictions, we're seeing that rise just a little bit. But I think the bottom line is the world is still kind of awash in oil we have those the price cap coming down from the EU, $60 per barrel with respect to Russia.

That's not entirely having that big of an effect on the market. That does affect prices on the margin. But as we've talked about with a number of guests here, when it comes to oil, it always finds a home. Dark supplies always find a home.

So even when there are bans in place, and that's not the price, that's not what we're talking about here, we would expect that oil to find a home. The bottom line is we are bouncing off a major, major potential support area here. So that does give a little bit of a tailwind to oil. And potentially with the reopening, we could see prices rise from here.

- And Jared, really quickly, can we handle the oil price cap. And for those who haven't necessarily been following all this, two key events that are happening today, the EU coming down with sanctions on oil. And then you've got the price cap in place, as well. Even if you say you're not seeing a significant movement, at least, on the back of that.

JARED BLIKRE: Yes, so $60 per barrel is what Russia is being priced capped on. It can sell those. It can sell that oil to various European Union members.

But it has decided not. Its going to sell those to other people. If they're selling to India, that means there's a little bit less to sell to somebody else. But given the fact that oil is a globally fungible that is replaceable and commoditized commodity, that just means that, if it's not available somewhere, they're going to find it somewhere else.