Crude slowly settles higher as OPEC initiates settlement
There has been massive in the global market as the price of oil faces an extreme level of selling pressure in the global market due to the increase of recent supply of oil. Most of the leading oil investors were in doubt since the price of oil was going down by breaking many important levels in the market. However, the price of oil found its first strong ground in the market after the OPEC stated their oil cut policy in the global market. Such a drastic action from the OPEC leaders has not yet been seen in the global market since 2008.The oil investors found a strong sign of relief in the global market after they were informed about the production cap in oil to bring stability in the oil price. The price of Brent started a strong bullish rally in the market after hitting the bottom at 26.01 and most of the leading investors made a decent profit in the market. However, the leading oil researchers are now overly cautious about the energy market since there are lots of uncertainty since in order to bring stability in the energy sectors a positive approach from all of the leading oil producing country is strongly required.
Decent Jump in crude: In the last Friday the price of crude oil jumped after hitting a minor support level in the market due to the optimistic statement from OPEC leaders. The leading oil investors are now seeing a light of hope in the market as most OPEC leaders will strictly initiate the production of 1.8 million barrels per day in their next meeting. Though most of the countries have appreciated OPEC decision in the last year but very few of them adhered to their rules in the global production. Since the supply was not cut as expected the price of oil kept tumbling in the market. However, the statement also gave the strong recovery in the price of oil for the last two months. According to the New York Mercantile Exchange, the crude oil jumped by 2.04% in the global market and traded at $52.42 a barrel. On the other hand, the Brent oil gained near about 2.46% in the global economy a traded at $55.49 a barrel. If some of the leading oil producing countries in the world participate in the production cap program in the global market then we might see another sharp rise in the price of oil in near future. Moreover, if OPEC declares a strict statement in their next OPEC meeting then the buyer will again find strong bullish pressure in the market.
The sentiment of U.S government: There has been a mixed sentiment prevailing in the global economy in the energy sectors since there has been a massive chaos in the current production of oil. The number of oil rigs in the U.S.A was only 23 in the last year and by now they have 551 total oil rigs. Most importantly in the last week, the U.S government has added more than 29 rigs and this is one of the most dramatic improvements in the energy extraction field for the U.S economy. Though the number of oil rigs has dramatically improved in the U.S economy but their government has stated that they will adhere to the oil cap production program stated by the OPEC but many investors are in doubt about this statement since their action is totally opposite in the global field. On the other hand the crude stock in the U.S economy also sharply rose in the very beginning of the year 2017 and this clearly indicates that the current production of oil in the U.S economy is exceeding the current market demand.
Leading oil producing countries sentiment: Most of the leading oil producing countries in the world has already stated that they will limit their current production of oil in the global market to bring stability in the energy field. Though most of the countries are stating they will adhere to production cap but countries like Iraq is producing more than 6 million barrels of oil per day. Such a huge scale production is directly affecting the price of oil the global market. The Iraq leaders have stated they are not yet ready to cut their current production of oil in the global market since their economy is mostly dependent upon the production of oil. However, they also gave hope by stating that they will limit the current production very soon and will participate to bring stability in the energy sectors. On the other leading oil producing countries like Kuwait and Saudi Arabia stated that they have already limited their current production rate of oil more than they promised. The leaders further added that they will limit their production rate more in the near future so that the current oversupply problem in the global economy mitigates to a greater extent.
Summary: There has been a massive chaos in the energy sectors since the current production rate of oil is still way more than the current demand of the global economy. Though some of the leading countries like Kuwait and Saudi Arabia has already taken steps to bring stability in the energy field but strong approach from all leading producers are required to bring stability. On the other hand in the next meeting, OPEC is most likely to come up with a strict statement to limit the current production rate of the economy. Considering all the facts the oil investors are still in doubt about the next movement of the market.