What is OPEC+ and why does their production decision matter?

OPEC+ is an alliance of oil-producing countries that coordinates production levels to influence global oil prices and supply. When they decide to increase production, it means more oil enters the global market, which affects energy companies throughout the supply chain, especially those that transport and store oil.

What are midstream energy companies?

Midstream energy companies are the 'middle' part of the oil and gas industry. They own and operate the infrastructure that transports, stores, and processes oil and gas between production sites and end consumers. This includes pipelines, storage terminals, and processing facilities that are essential for moving energy products to market.

How do midstream companies make money from increased oil production?

Most midstream companies operate on fee-based business models, earning revenue based on the volume of oil and gas that flows through their infrastructure. When OPEC+ increases production, more oil needs to be transported and stored, which means higher volumes and potentially higher revenues for these companies.

What does 'summer demand' mean for energy stocks?

Summer demand refers to the seasonal increase in energy consumption during warmer months, driven by higher gasoline usage for travel and increased electricity demand for cooling. This seasonal pattern typically supports higher energy prices and increased activity across the energy sector.

What is dividend yield and why do many energy companies pay dividends?

Dividend yield is the annual dividend payment divided by the stock price, expressed as a percentage. Many midstream energy companies pay regular dividends because they generate steady cash flows from their fee-based infrastructure operations, making them attractive to income-focused investors.

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Riding The OPEC+ Wave: Midstream Energy Plays

OPEC+ is moving forward with its plan to increase oil production to meet summer demand. This creates an opportunity for companies that transport, store, and process the additional crude oil and natural gas.

Han Tan | Market Analyst

Updated 2 days ago | Published at juillet 25