OPEC Schedules Production Freeze Proposal Meeting

03/17/2016 9:05 am EST

Focus: ENERGY

Michael Berger

President & Founder, Technical420.com

After the two largest oil producers in the world agreed to freeze oil production output at January levels, OPEC announced plans to meet with non-OPEC oil producers in mid-April to get more countries on board with the plan says Michael Berger of Technical420.com, who highlights his top long-term energy and MLP investments.

OPEC and non-OPEC producers are scheduled to meet in Doha, Qatar on April 17th to discuss freezing oil production output.

Although we do not know who will attend the meeting, the market responded favorably to this news. Shortly after it was announced, oil rallied and traded as high as $40.11 a barrel in London.

Russian Energy Minister Alexander Novak said 15 countries have already confirmed their participation in the meeting.  participate and that. Even though Iran plans to increase oil production after economic sanctions were recently lifted, Novak said Iran is willing to join the meeting.

Where does oil go from here?

Oil prices have rallied more than 30% since the production freeze proposal was announced by Saudi Arabia, Russia, Venezuela and Qatar in mid-February. The proposal helped prop up the price of oil but recent developments have caused oil to rally in recent weeks.

Outages in Iraq and Nigeria have disrupted more than 800,000 barrels a day of supply and this has tightened the Brent market.

Also, falling drilling activity in the domestic shale oil industry has caused a majority of analysts to revise their forecasts for declining oil production in North America.

Commodity Prices Remain a Headwind

Although we do not expect to see the price of oil and gas rebound until the back half of 2016 ($55 a barrel by year-end), we believe the risk: reward profile is moving to the upside.

We continue to prefer companies that have strong balance sheets, premium acreage, healthy debt-adjusted production growth, and seasoned management teams who can find value in a weak market.

Some of the companies that we expect to outperform the market on a longer-term basis are: Concho Resources (CXO), Memorial Resource Development (MRD), Halliburton (HAL), Baker Hughes, Inc. (BHI), Occidental Petroleum Corp (OXY), Tesoro Logistics LP (TLLP), and Enterprise Product Partners (EPD).

By Michael Berger, President and Founder, Technical420.com

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