Energy stocks traded at the top of leader board in markets all over the world Monday, while global crude prices extended gains, as investors reacted to improved U.S-China trade signals and plans by Saudi Arabia to list its state-owned oil company in a deal that could be worth more than $1.5 trillion.
Saudi Aramco chairman Yasir al-Rumayyan said Sunday that "now is the right time for us" to float the state-owned giant, the world's most profitable company, adding that shares will first be listed on the Riyadh before being offered to international investors. While few details were offered as to how, when and at what price the shares will be sold, analyst and bankers working on the transaction suggest Aramco will ultimately be valued at between $1.2 trillion and $2 trillion.
However, the group's commitment top paying dividends in the region of $75 billion a year, from a net income base of around $110 million, suggests oil prices will need to remain at or above $60 a barrel in order for the longer-term ambition of drawing investors to the group -- and the broader Saudi economy -- to be successful.
That could mean Saudi Arabia -- which recently replaced its long-serving Energy Minister with Abdulaziz Bin Salman, a son of King Salman's son -- will attempt to deepen its influence on the OPEC producers cartel in order to keep global prices elevated by extending production cuts, which are already taking 1.2 million barrels from the market each day.
Brent crude futures for January delivery, the global benchmark, jumped 44 cents Monday to trade at $62.13 per barrel, the highest in more than a month while WTI contracts for December delivery were seen 34 cents higher at $56.54 per barrel.
Energy stocks, meanwhile, topped both the Dow and the S&P 500 Monday, with Cimarex Energy Co. (XEC) - Get Report rising 6.75% to $46.95 each, Pioneer Natural Resources Co. (PXD) - Get Report gaining 6.4% to change hands at $135.69 each and Devon Energy (DVN) - Get Report rising 6.05% to $22.45 each.
On the Dow, Chevron Corp (CVX) - Get Report gained 4.7% after it sold a Caspian Sea oilfield stake to Hungary's MOL for $1.57 billion, while domestic rival Exxon Mobil Corp. (XOM) - Get Report was marked 2.96% higher at $71.67 each.
In Europe, BP plc (BP) - Get Report was one of the top gainers on the FTSE 100, rising 2.85% to 511.1 pence each, while oil and gas services group TechnipFMC (TKPPY) topped the CAC 40 in Paris with a 4.31% gain.