"Fundamentally, things are still extremely weak. It's being driven more by hope," said Matthew Smith, head of commodity research at ClipperData, which tracks global crude shipments. OPEC has brought about all the hope due to Saudi Arabia, Russia and other producers agreeing to a tentative deal on February 17 to freeze output. "That was the trigger. It helped us reach a bottom in oil," said Rob Thummel, a portfolio manager at energy investment firm Tortoise Capital.
Iran participation is also included in the deal. Iran Officials deemed the freeze a “joke” and reports are that Iran will still amp up output with the lifted sanctions. "The recent output freeze talks are unlikely to have any immediate impact on market balances," Barclays wrote in a report. Analysts also pointed out that the countries that have agreed to freeze production are already producing close to their full capacity. Barclays referred to deal as a way to try to build trust for a possible team action plan between global producers. “It's made people think twice about betting against oil” said Mike Wittner, global head of oil research at Societe Generale. Although oil prices have been steadily higher for almost two weeks now, I do believe the very low oil prices will back soon.
http://money.cnn.com/2016/02/29/investing/oil-prices-surge-opec/index.html
It is still incredible to think that the oil prices hit an 13-year low at about $26 a barrel just one month ago. However, it is nice to hear that prices are back on the rise and multiple countries are cooperating to help avoid prices from seeping so low again. I am interested to see how this increase of gas prices will effect the United States and international stock markets.
ReplyDeleteThis would be such a powerful example of collusion! If they made this happen then the price would skyrocket the next day. Prices would go through the roof, needlessly because we have such a high supply right now. But it would be really interesting.
ReplyDeleteI think this article proves that even if oil goes up relatively soon we won’t see a return to 4$ gas prices for a while. I like the example of Iran primarily because it shows that there is too much to gain from not abiding by the oil freeze. I also agree that there would be collusion as Greyson said, and as Greyson probably also knows OPEC and the oil market at large is no stranger to collusion. My money is on that oil prices will go down once again before they go back up for the summer season. Any takers?
ReplyDeleteI am interested to see how high will the price per barrel will get now that the price is climbing. the price of oil always increases in the summer months because there is more driving happening due to the nice weather which takes gas which is made from oil. I wonder if the price will get close to $100 a barrel like it was just a couple of years ago. then when prices get really high people will complain that the price of oil is to high so maybe we could find a happy medium
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