Premier Oil rallies 10% on prospect of OPEC+ supply cuts
The UK-based oil and gas company saw its share price close 10% higher on Monday, driven by the prospect of OPEC+ cutting global supply in a bid to support prices.
![Premier Oil](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/news-article-image-folder/BG_oil_barrel_Brent_WTI_321456.png/jcr:content/renditions/original-size.webp)
Premier Oil shares closed 10% higher on Monday, driven by the prospect of OPEC+ cutting global supply in a bid to support prices.
Since the coronavirus pandemic gripped the globe in mid-February, the UK-based oil and gas company has seen its share price fall by more than 75%.
Premier Oil closed at 25p a share on Monday.
The stock hit an all-time low of 12p in mid-March after the hedge fund Asian Research & Capital Management (ARCM) – one of Premier Oil’s major creditors – warned the oil and gas company risked running out money amid the slump in demand due to Covid-19.
‘Premier Oil should be focusing on its cash flow position and protecting the balance sheet as a matter of priority,’ ARCM said last month.
‘We encourage the company to engage with its creditors to find a long-term solution which would significantly reduce leverage and provide a stable balance sheet.’
In response, Premier Oil said that it plans generate at least $100 million in savings in 2020 to cope with the economic fallout from Covid-19. The company has also maintained its full-year production guidance.
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Oil prices slump but remain above $30 benchmark
Oil prices slumped on Monday after OPEC+ talks were postponed until Thursday, though Brent crude managed to stay above the $30 benchmark.
OPEC+ will meet to discuss cutting oil production by about 10% of world supply, which equates to a reduction of around 10 million barrels of oil per day (bpd) in a global effort to support the market amid the economic fallout from Covid-19.
But even if OPEC+ can agree to a 10 million bpd cut in oil production, it is unlikely to be able to offset weakening demand, especially when forecasts predict a 23 million bpd supply overhang in April.
Premier Oil: technical analysis
Premier oil has seemingly formed a bottom, with the stock rising 96% from the lows of 12.6p seen in mid-March.
'The next major resistance comes into play at 33.5p, above which we could see the buyers come more convincingly into play,' Josh Mahony, senior market analyst at IG said.
'However, traders will be keeping a close eye out for whether that level can be overcome to bring a more bullish medium-term view,' he added.
You can go long or short Premier Oil using derivatives like CFDs and spread bets.
![chart1](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/content-2-chart-images/Premier oil 06-04-20.png)
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