At the end in Algeria, the informal meeting of member countries of OPEC gave the speculators a surprise, according to the Reuters news Agency: unexpectedly they agreed to restrict oil production at the level of 32.5–33 million barrels per day.
Inspired by this news, oil traders rushed to buy futures for the supply of “black gold” and the price of oil immediately jumped 6% on both sides of the Atlantic. Accordingly, the dollar is inversely proportional to the oil became cheaper, and the overall dynamics of exchange went up under the influence of positive prospects for the energy sector: the restriction of output must lead to higher prices of oil and increasing the profits of oil companies.
However, the excitement may not last long — replaced it is clearly coming skepticism. According to the same Reuters, after the initial spike in oil prices came a pause for thought.
First, OPEC is not all oil producers: there are at the moment, Russia has more oil does not produce one. OPEC plans to turn to Russia and other countries to limit oil production, but what will be the reaction — it is a question without an answer.
Second, a preliminary agreement reached in Algeria, is too vague. Reuters quoted Michael McCarthy, chief market strategist at CMC Markets, who notes “the complete absence of parts, including the potentially problematic question of which countries will cut production”. The analyst adds that “the six per cent rise in the price of crude oil is good for newspaper headlines, but… it’s stock rally may quickly fade away”.
OPEC will hold its next formal meeting for approval of the production levels of individual countries on 30 November in Vienna. Perhaps after that — and in the case of joining the agreement Russia — prices are steadily going up.
But there is another, third thing: if oil prices go up, will increase its production — particularly in North America, and increased demand be repaid by the increased offer. Bloomberg predicts that in this case, American producers of shale oil, which OPEC had hoped to bankrupt low prices, take advantage of high prices to put new wells”. So to be continued — we’ll see what happens.
TO WHOM AND HOW MUCH IS RECOMMENDED TO REDUCE OIL PRODUCTION
Major miners of “black gold” in the world and the impact of their performance on the quotes the cost of raw materials
At a meeting in Algeria, OPEC and independent oil producers were asked to reduce production in order to reduce the surplus of raw materials on the world market. Of course, the question arises, would these countries. But there is mystery and a little more complicated: will it help prices and is there a risk that the prices again will not fold like a card house falls to values under which our state economists will have to go into a loop.