Australian energy shares have continued their impressive run this morning after oil prices rose to their highest levels since 2014 overnight.
Here is the state of play in the energy sector during early trade on Tuesday:
- The Beach Energy Ltd (ASX: BPT) share price has pushed 2% higher to $2.17.
- The Cooper Energy Ltd (ASX: COE) share price is up 1.1% to 46 cents.
- The Oil Search Limited (ASX: OSH) share price has climbed 1.2% higher to $9.14.
- The Origin Energy Ltd (ASX: ORG) share price has risen 1.4% to $8.40.
- The Santos Ltd (ASX: STO) share price has pushed 1.4% higher to $7.40.
- The Senex Energy Ltd (ASX: SXY) share price has risen 4% to 53 cents.
- The Woodside Petroleum Limited (ASX: WPL) share price has climbed 0.9% to $38.79.
Why are oil prices rising?
According to Bloomberg, the WTI crude oil price climbed 3% to US$75.47 a barrel and the Brent crude oil price rose 2.6% to US$84.92 a barrel.
Oil prices rose strongly last night after OPEC added only a modest amount of additional supply to the market during September. Expectations had been for a far greater addition, offsetting the loss of supply from Iranian producers caused by U.S. sanctions.
According to Reuters, its survey found that OPEC pumped 32.85 million barrels per day in September, up 90,000 bpd from August's revised level.
However, the 12 OPEC members that are bound by a supply-limiting agreement actually cut output by 70,000 bpd because of declines in Iran and Venezuela.
Norbert Rücker from Julius Baer warned that: "The supply situation looks fragile indeed, as any additional shortfall such as a deterioration of the situation in Venezuela would tighten oil supplies."
If this happened it could potentially put the Brent crude oil price on a path to US$100 a barrel, which would be great news for energy producers but not for fuel guzzlers like Qantas Airways Limited (ASX: QAN) and Sealink Travel Group Ltd (ASX: SLK).
During Asian trade oil prices have built on last night's gains by edging slightly higher.
