Energy Up After Russia Slashes Oil Production, Texas Freezes — Energy Roundup

Shares of energy companies rallied after Russia slashed oil production targets in response to the cap imposed on prices of its exports.

Russia’s deputy prime minister, Alexander Novak, told state television the nation could reduce oil output by 5% to 7% in the new year.

U.S. oil futures rose 2.7% to $79.56 a barrel, and are now about 12% above their lows in early December.

“One of the main reasons is that oil refiners are almost frozen in Texas so there’s a disruption of supply and that always helps boost prices,” said Quincy Krosby, chief global strategist at brokerage LPL Financial.

The globally tracked Brent oil futures contract was even stronger, gaining 6.2% this week to close above $83 a barrel, even as concerns percolated about Chinese Covid-19 outbreaks.

“There will be a reopening, albeit more slowly than the market would want, and China is the largest oil importer,” said Ms Krosby.

The energy sector has been by far the strongest sector on the broad S&P 500 in 2022, rising more than 50% against the backdrop of the Ukraine war. This trend could continue in 2023 despite the risk of a slowdown in global demand, said the LPL Financial strategist.

“In periods of concern over economic slowdown, you also want companies with strong cash flows where dividends are on offer,” said Ms. Krosby.

Write to Rob Curran at rob.curran@dowjones.com