UAE's Flagship Crude Oil Sees Record Volume as OPEC+ Adds Supply
Trading activity in United Arab Emirates' flagship crude has surged this month to the highest on record, as OPEC+ raises supply quotas.
Aggregate open interest across the full curve in Murban futures on ICE Futures Abu Dhabi rose to 81,000 lots earlier this month, the highest since the contract was introduced in March 2021, exchange data show.
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Oil prices have been falling as OPEC increases production. Like Trump with trade, the cartel is looking to re-shape the chess board. Here's what investors need to know This story originally appeared on WallStreetZen The dominant story of 2025 has been President Trump using tariffs to restructure global trade. So, many investors are missing another major development as OPEC has been increasing oil production. Notably, this increase in production has come about despite already weakening oil prices. This is not an accident as OPEC is looking to increase its market share. Over the last decade, steadily rising US shale oil production has eroded OPEC's control of the market and resulted in the US becoming a net exporter of energy. WTI Crude oil started the year at around $74 per barrel and currently trades below $60 per barrel. However, shale oil production is only viable at prices above $70 per barrel. 2020 and 2014 The last two major instances of OPEC members increasing oil production were in early-2020 and 2014. And, both instances marked the beginning of multi month declines in oil prices. In 2014, WTI crude dropped from $105 per barrel in June 2014 to below $55 by the end of the year. The major impetus for this increase was the growth in US shale production which was starting to affect OPEC's market share and pricing power. In early 2020, Saudi Arabia decided to increase oil production in an effort to discipline other OPEC members who were not abiding by the cartels' production quotas. As the chart below shows, this resulted in oil prices sliding lower and eventually collapsing as the pandemic temporarily crippling oil demand. Both experiences contain important lessons for investors. 2025 In its first production surge, OPEC didn't materially cut back on supply increases until there was a material decrease in rig counts and shale production. 2020 gives us few clues, since the production surge ended quickly, once the nature and challenge of the pandemic became clear in early March. However, the biggest takeaway is that investors should not ""fight OPEC." A common adage on Wall Street is "don't fight the Fed." Essentially, this means don't be bearish when the Fed is aggressively easing or don't be overly bullish if the Fed is tightening policy. Similarly, investors should have a more risk-averse approach when investing in oil, whenever OPEC is increasing production. What Opportunities Does the OPEC Surge Create? Instead, investors should focus on the consequences of a multi month decline in oil prices, as these are where investment opportunities can be found. 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United Airlines (UAL) United Airlines (UAL) is a major beneficiary of lower oil prices as it reduces costs, boosts margins, and leads to an increase in consumer spending. As oil prices dropped by more than 50% between June 2014 and February 2015, UAL's stock was up by nearly 70%. UAL also brings outstanding financials given a solid balance sheet, low debt-to-equity ratio, and a rock-bottom forward P/E of 6.6 which is significantly cheaper than the S&P 500's forward P/E of 22. The company is also well-regraded by Wall Street analysts as it has 8 Strong Buy ratings and 3 Buy ratings with no Sell or Hold ratings. It also has a consensus price target of $103 which implies 30% upside. Another indication of strong performance is that the company has topped analysts' earnings expectations for 11 straight quarters. Similarly, the Zen Ratings are also bullish on the stock as it has a Strong Buy (A) rating. 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The stock has appeal to both value and growth investors. The company's recent earnings reports reveal strong cash flow. Over the last 12 months, the company generated nearly $100 million in cash which is impressive given its total market cap of $825 million. This combination ensures a margin of safety while providing exposure to positive catalysts. 3. Hallador Energy (HNRG) While UAN will benefit from higher fertilizer prices, HNRG will benefit from higher coal prices. Coal prices and natural gas prices tend to move in the same direction. Further, the Trump administration's embrace of coal also removes another major headwind for the industry which led to underperformance for most of the last decade. Essentially, coal stocks were mired in a brutal bear market from 2010 to 2020. Low natural gas prices made it less competitive. At the same time, the government was embracing environmental policies to reduce coal consumption. 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