Oil is still trading significantly higher prior to the OPEC meeting
The price of oil is rallying high for three consecutive weak even though the green bucks have exhibited its strength in the currency market. The leading oil manufacturing companies have been rigging the oil hard in the last couple of month causing instability in the oil price. In the eyes of trained investors the OPEC might cut the output rate of oil production at their next meeting which might bring some stability in the oil price. The price of Brent crude oil rose significantly which caused $47.82 per barrel. The rise in price was near about 96 percent which is the highest since 1st November 2016.Along with the sharp rise in Brent Crude oil, the price of U.S West Texas Intermediate (WTI) futures also rose by 87 cents resulting $ 46.56 per barrel. According to Putin oil is trading 1% per higher on the day and he also stated that such an imminent rise in the oil price despite of the massive oil production is going to affect the market in the longer term. Most importantly there has been a contradiction among the OPEC leading member whether to cut the production rate in this year also caused fear into the mind of investors since if things goes like this for a prolonged period of time then the normal trading condition will be hampered to a great extent. Leading hedge firm manager and investors believes that the OPEC needs to come up with a solid plan to cap the oil production to an optimum stage as such the global economy will remain stable.
President Putin has always immense power over the oil industry and he stated that he see no obstacles to non-OPEC members like Russia other than agreeing to freeze oil output. Previously Russia used to produce more than 11 million barrels per day which was also one of leading cause of the instability in the oil industry. On the contrary the OPEC members also proposed a smart solution to Iran and told then to cap their production so that they are not forced to cut their output in the near term future. But Iran has been causing trouble to the oil industry for a long period if the time since they are facing external pressure from the Petroleum Exporting Countries for a long period of time. For instance Tehran is trying to recapture the oil market solely which has been under their control during the Western sanctions. The current oil production in Nigeria and Libya is also hampered to a great extent due to unexpected violence but they are most likely to recover their loss in global market in the near term future. But a strong recovery in the oil production sectors of both the country will also affect Saudi Arabia in the oil export business. The US crude futures and options has been trading higher in the global market for three consecutive weeks as the hedge funds raised their holdings in the recent days. These event has created massive fear into the mind of investors since they are left with no clue about the next price movement of the oil industry.
One of the most leading oil manufacturing companies like Rowan Companies Plc. said to Saudi Aramco which is also the state oil company of Saudi Arabia that they are going to operate as joint venture organization in some of the offshore drilling rigs in their country. If things goes in such a harmony then we can easily assume that the price of oil will most likely to rise again in the near future. But good thing is that the joint venture is not going to operate in the year 2016 which means OPEC will have enough time to impose their strict policy in the Global market for better economic stability. Last week the oil futures logged their first weekly gain despite of the strict policy of the OPEC which is most likely to get implemented in the global market after the next OPEC meeting.IN the London exchange Brent oil tacked on 3 cents to settle at $46.86 per barrel which is pretty close to Friday’s price. The strong rally paused its move after hitting the high of 2nd November 2016.The traded Brent futures logged a gain of $2.11 for the week which is also very positive for the investors.
The upcoming OPEC meeting is going to play an important role in the oil industry since strict policy might be implanted to the oil producing countries in order to bring stability in the oil price. Due to the recent ongoing crisis in the oil industry, several OPEC oil ministers arranged a meeting in Doha so for discussing to issue of massive oil production in the global economy. Most of the meeting ended up with a proposal that Iran should cap its oil output at 3.92 million barrels per day. Most of leading oil manufacturing countries are supporting the proposal of oil production cap policy which will limit the out production to 32.5 million to 33 million barrels per day.it true that if all the countries agrees to this proposal then there the oil industry will have much more stability in the global market but in the mind of professional investors there is strong doubt that this policy might not get implement in the upcoming OPEC meeting. Despite of the massive chaos in the oil industry, professional traders are still optimistic about the oil production cap policy .Experts are suggesting not to take any risk by investing in this sectors before the oil production war settles down in the global economy.