The Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based energy exchange traded fund, surged 2.96% over the past day, thanks to the meeting of the Organization of Petroleum Exporting Countries (OPEC).
At its meeting in Vienna on Friday, a deal was announced to raise its output to about 600,000 to 800,000 barrels per day.
“Capacity constraints among OPEC participants make it difficult to imagine the supply gap being filled, while fundamentals remain buoyed by robust demand both inside and outside the US,” said State Street Global Advisors (SSgA) in a note out Thursday. “We project OPEC to move slowly with supply increases—if they move at all—during their June 22nd meeting and we anticipate Brent crude moving above recent highs with a possibility of reaching $85/bbl over the summer months. Oil and energy equities look attractive and any pullback may present a buying opportunity for investors to consider.”
Analyzing Oil & OPEC Data
Since 2016, OPEC and a number of other major oil prices like Russia have been in a concerted effort to cut 2% of the global crude supply in an attempt to diminish the global supply glut and stabilize crude prices.
Analysts now project the oil market could move into a deficit in the second part of 2018 and 2019 of 0.5 million barrels and later 0.3 million barrels per day as demand begins to outpace supply.