Fox Capital Partners Report OPEC Decision Sinks EM Energy Shares

2024-11-22 07:00:37 Environment

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Fox Capital Partners: Emerging market energy stocks slump to 2 month low after OPEC refuses to reduce production.

Shenzhen, China-based broker-dealer, Fox Capital Partners says it sees no sign of an end to pain the emerging market energy sector after Friday?s decision by OPEC (Organization of Petroleum Exporting Countries) to persist with its strategy of maintaining crude oil production at current levels of just over 31.5 million barrels per day.

Cnooc, China?s biggest offshore O&G producer fell nearly 5% while Lukoil, the Russian giant, shed 2% as Saudi Arabia, OPEC?s de facto leader, showed little sign of bowing to pressure from the group?s poorer members to limit production in order to support prices.

?There isn?t much around to rein in the bearishness on oil and energy right now,? explained Ollie Seigler, head of energy research at Fox Capital Partners. ?WTI closed below $40 on Friday and, frankly, the only way we think we?ll see a rally is in the event the US Federal Reserve doesn?t raise interest rates later this month.?

Crude oil is priced in US dollars. If the Fed fails to deliver the much-anticipated 25 basis points increase in US interest rates, the dollar would likely weaken and crude would rise in price. High cost oil producers are being squeezed but they are also becoming much more efficient and consequently, the US shale oil producers OPEC is trying to squeeze still produce as much oil as they were when OPEC first implemented its strategy, even with far fewer oil rigs in operation.

?The blue chip energy companies are still paying reasonable dividends but if you?re looking for nominal gains, Fox Capital Partners would advise looking elsewhere until the overall picture becomes clearer,? concluded Seigler.

About Fox Capital Partners
Fox Capital Partners is a successful, independent investment management practice established in Shenzhen City, China and headquartered in Shenzhen. Our highly-qualified professionals advise on a wide array of wealth accrual, preservation and portfolio management solutions aimed at affluent individuals and families in Asia and elsewhere.