Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



OPEC Has Handed You an Opportunity

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Headlines have indicated that crude prices have slid again on the basis of OPEC's inaction this past weekend in Cairo. But the situation isn't that simple, since cartel members plan to meet in Algeria in just a couple of weeks and almost certainly will then cut output from current levels -- perhaps substantially.

Let's review the bidding here: At this point, the world is using in the vicinity of 86 million barrels a day of oil, of which the 13 OPEC nations produce about 40%. For perspective, ExxonMobil (NYSE: XOM  ) , the world's largest private oil company, produced the equivalent of slightly less than 2.3 million barrels of oil a day in the most recent quarter. Big Oil peers Chevron (NYSE: CVX  ) and ConocoPhillips (NYSE: COP  ) each produced less.

Nevertheless, as you well know, crude prices have plummeted from above $145 a barrel in July to a level just above $50. The current price is well below what some OPEC countries -- especially Iran and Venezuela -- need to balance their budgets, so there had been a push for the Cairo session, with at least the two above-named members striving for an immediate third production cut, following September and October chops.

Or at least, that was the theory. The difficulty is that some of OPEC's cash-starved members apparently haven't reduced their production as they'd promised. Nevertheless -- and this, from my perspective, sets up a potentially attractive opportunity for Foolish energy investors -- the group will meet again on Dec. 17.

And perhaps more importantly, Saudi officials have taken a rare step in suggesting that $75 a barrel -- about 50% above today's rate -- is a desirable level for crude. The Saudis, OPEC's de facto leaders, have generally avoided advertising what they believe to be an ideal price.

But as all Fools can determine readily, the 17th is right around the corner. And it appears that the cartel's members -- along with their supporters, including Russia -- concur that another production cut should be agreed to at that time. That, it seems, provides Foolish energy investors with an ideal opportunity to study the energy sector and line up names that appear to have an upside over, say, the next year or two.

The group at the top of my list includes Exxon, BP (NYSE: BP  ) , Schlumberger (NYSE: SLB  ) , and Halliburton (NYSE: HAL  ) . 

Of my favorites, BP and Schlumberger have been accorded five stars by Motley Fool CAPS players, while Exxon and Halliburton each wear four. Do those ratings include your vote?

For related Foolishness:

Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned above. He does, however, welcome your comments, questions, or conversations. The Fool's disclosure policy won't ever be cut.

Read/Post Comments (1) | Recommend This Article (19)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 03, 2008, at 2:26 PM, velocitywave wrote:

    I'm definately a newbie when it comes to the oil sector, so pardon my highly nieve questions!

    But I'm just wondering if higher prices in oil, necessarily translate to higher share prices in the major oil companies, such as Exxon, or Schlumberger?

    For example, I'm looking at Exxon's share price for the past 2 years, and I don't see a suprising spike in their share price, when oil skyrocketed in the summertime?

    Same thing with schlumberger.

    If these companies didn't experience a super impressive spike this summer, when the price of oil was really insanely high (and despite their record profits)... what does that mean?

    Does that perhaps mean that the higher oil prices of the future have already been partially priced into the current share-prices level?

    Are there perhaps other companies whose share price is more directly correlated to the price of oil?

    Again... I'm very much a newbie in this sector... But I'd definately like to learn more about investing in this sector.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 786047, ~/Articles/ArticleHandler.aspx, 10/24/2016 1:51:40 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
BP $36.25 Up +0.20 +0.55%
BP CAPS Rating: ****
COP $41.54 Up +0.05 +0.12%
ConocoPhillips CAPS Rating: ****
CVX $101.30 Down -0.57 -0.56%
Chevron CAPS Rating: ****
HAL $48.43 Down -0.32 -0.66%
Halliburton CAPS Rating: ****
SLB $80.47 Down -2.52 -3.04%
Schlumberger CAPS Rating: ****
XOM $86.62 Down -0.59 -0.68%
ExxonMobil CAPS Rating: ****