Oil Prices Spike on OPEC Surprise. How to Play It.

Oil Prices Spike on OPEC Surprise. How to Play It.
Avi Salzman
·2 min read

Oil prices shot as much as 5% higher on Thursday as OPEC and its allies agreed to extend most of their production cuts through April, a sign that high prices could be here to stay. Oil company stocks jumped, too, often much more than the commodity, because prices this high will give many of them operating leverage. Because capital costs are high in the industry, oil company margins expand considerably once prices rise above $50 and companies have fully paid for the cost of the equipment and labor they need to extract oil.