To The Moon

Please find and follow my YT channel (nerdbull1669) for Daily SG and US Stock Watchlist.

Do follow me as I share quality stock pick for Daily Watchlist.

Saudi Arabia and other OPEC+ oil producers announced further oil output cuts of around 1.16 million barrels per day, in Oct 2022 - OPEC+ to cut oil production by 2 million barrels per day until the end of 2022.

I would like to examine how this output cuts could benefit the renewable energy stock.

Do note that we are still a long way to have renewable energy to replace fossil powered energy.

Previous Output Cuts (Oct 2022) vs Latest Output Cuts (April 2023)

If we look at how the crude oil prices have moved since the last output cuts announced in Oct 2022, effective in Nov 2022.

There was a surge in both Brent and W.T.I. prices when the cut was announced in early Oct 2022. Prices start to stablise and come down shortly after.

We might wonder why is this so? Is the demand for crude oil really reduced? But that period most of the world is already in post-pandemic era.

Renewable Energy Stock Performance

I would look at this renewable energy stock to see how their stock prices have benefited from the previous output cuts and if their stock prices would move up for the recent output cuts.

$NextEra(NEE)$

NextEra Energy is one of the world's largest producers of wind and solar energy. It generates power at its Florida utilities.

They sells power under PPAs to other utilities and users.

They have unveiled the Real Zero plan in 2022 to eliminate carbon emissions from its operations by 2045. It aims to expand its solar energy and storage capacity while replacing natural gas in its power plants with green hydrogen and renewable natural gas.

Its adjusted earnings per share have been increasing at an 8.4% compound annual rate since 2005. Their dividend is at a 9.8% annual rate.

NextEra has increased its dividend for more than 25 consecutive years, earning it the Dividend Aristocrat distinction.

Next Era has expects its investments to continue paying dividends for shareholders. It predicts earnings will increase at or near its 6% to 8% annual target range through at least 2025, powered by continued investments in renewable energy.

NextEra expects to deliver around 10% annual dividend growth through at least 2024.

NextEra Energy (NEE) stock price during October 2022 Output Cut

The output cut was announced in early October 2022, and effective from November 2022, as you can see NEE has maintained its stock price at around $76.69 through the period till end of 2022.

They are still able to provide good dividend return while maintaining a rather steady stock price in 2022.

NextEra Energy (NEE) stock price now (April 2023 Output Cut Announced)

NEE stock prices actually drop when the price of crude oil was below $80. It might show us that demand for renewable energy is inverse of price increase of crude oil.

When oil and energy prices increase, consumers would increase the demand for renewable energy.

One of the reason why OPEC+ wanted to do the output cut maybe is because of the demand for crude oil will reduce over time.

Summary

There are many industries which will be looking at renewable energy as the movement for Go Green is getting more noticed.

Plus, there is an expected increase in crude oil prices due to output cut, the demand for renewable and sustainable energy would be much noticed and increased.

Here are some of the sectors which might benefit from the renewable energy

• Data Centre Hosting and Cloud Provider

• Crypto Data Centre

• Building and Facilities Owner and Provider (e.g. REIT)

• Large scale production facilities

There are many more, but companies who has green plan in their management foresight, would benefit and should be able to reduce the increase in operating cost due to the increase on energy prices.

I would monitor this stock closely and on the development of the crude oil prices. What other action would be taken from non-OPEC countries.

Remember the increase in crude oil might push back to risk of higher inflation, due to increase in prices(across the board).

This might prompt the Fed to relook into the rate hike campaign to continue further hike?

Appreciate if you could share your thoughts in the comment section on what do you think of this analysis and what is your thoughts on the output cut and inflation?

Do like, share and comment on this article if you find this trading thought useful.

@TigerStars appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.