Further supply cuts key to oil price

1 November, 2017

Brent oil is now sitting comfortably above the $60, making its highest level in more than 2 years on the back of a deal between Russia and Saudi Arabia to extend production cuts past March next year.

Up until now, the deal to reduce output between Opec members has run smoothly with most countries sticking to their agreed output but come March, things could change and not all may be on board for an extension of cuts.

Countries such as Libya and Nigeria are looking like the countries that may opt out of the next deal as they feel they need to make up for lost time due to supply disruptions for various reasons

It will become clear to the market over the next month or so who is in or who is out and depending on how many countries refrain from extending production cuts, the oil price could be in for a sharp reversal.

Another thing to watch are drillers from the USA who are currently ramping up production to take advantage of higher prices and if history is anything to go by, this will eventually lead to an oversupply of oil in the market which will also pressure the price.

US shale producers claim they were still profitable when oil was around $40 a barrel so the margin for a pullback is quite significant

“We could rapidly go from a predicted deficit of around 260,000 barrels to a surplus of close to 1.5 million barrels. Prices would undoubtedly collapse,” said Matt Stanley, a fuel broker at Freight Investor Services.


Source link  
D-Day for the pound

Traders and Fund managers alike are expected to be glued to their desk on Tuesday evening UK time as the British parliament vote on the Brexit Deal put before them...

Will gold's rally continue?

After spending the majority of November range bound, the gold price has finally broken out to the upside as investors seek out safe havens from the anticipated...

Dollar could weaken for years

The US dollar has been the star performer in the currency markets this year, gaining solidly against all the major currency but some are beginning...


Gold may finally Breakout

Gold is now on track to rack up its 5th straight day of gains on the back of geo political factors as well as expectations the US Federal Reserve may...

Will gold continue rally?

For more than 2 weeks now, the gold price has been on a steady uptrend after volatility in world stock markets, and in particular, the US market which...

Pound may be headed for parity

The market had been expecting such a move so all eyes were on the following monetary statement for signs of the US central bank's future moves...


Fewer rate hikes may support gold

The Gold price has continued to rally today after yesterday's release of consumer price index figures from the US threw into doubt the ability for the US...

More rate hikes may boost pound

The British pound has been well supported over the last few days as speculation that a rebellion within against Prime Minister May's conservative party...

Oil rises on lower US reserves

The oil prices is trading higher in today's trading session, following on from yesterday solid gains after a fall in US crude oil inventories and the...

  


Share: