Posted at 2:09 PM , on December 21, 2016
For the first time since 2008, the OPEC at its Vienna meeting on November 30th decided to put supply restrictions. In fact, the OPEC went one step ahead. It also agreed upon the sharing of production cuts among the OPEC member nations. But, the question is whether it will really prop oil prices?
Posted at 4:34 PM , on May 25, 2016
What is driving the rise in oil prices and can it sustain?
From the lows of $27/bbl in February 2016, Brent Crude has rallied over 75% as it gets closer to the $48/bbl mark. What has changed in the last 3 months to justify a 75% appreciation in the price of crude oil? Even as Saudi Arabia, Russia and Iran continue to pump oil at record levels, there are supply disruptions at other oil centers. Continue reading
Posted at 6:23 PM , on March 8, 2016
How feasible is a sharp bounce in the year 2016?
Nobody is willing to believe that oil can bounce by 40% in the year 2016. But then, nobody expected gold to give a return of 18% in two months since mid-December 2015. A recent report by UBS points out that while oil will continue to be under pressure, there is a likelihood of crude oil rallying by as much as 40-50% during the current year alone. That means oil touching a price of nearly $50/bbl from the current Brent crude oil levels of $34/bbl. Continue reading
Posted at 4:43 PM , on December 15, 2015
Could the next year finally belong to the OPEC?
The OPEC meeting last week virtually gave a free hand to the OPEC members to increase their output. Contrary to expectations of an output cut proposal by Saudi Arabia, the OPEC was actually permitted to pump more oil. One argument can be that with just about 33% market share, OPEC has limited influence on oil supply and prices. But more importantly, this also helps the OPEC achieve its long term goal of making oil extraction unviable in most of the developed world. Continue reading
Posted at 4:32 PM , on November 20, 2015
Over the last 12 months, oil prices have been on a consistent downtrend. From a high of $115 / bbl, oil prices have fallen closer to the $45 / bbl mark. More importantly, it shows no signs of relenting. The sharp fall in oil prices has been blamed on a variety of factors. To begin with, the US shale production has been growing at a record pace over the last 4 years and the output continues to grow despite more wells idling. Secondly, the OPEC has decided to stop playing oil policeman and decided that it is not interested in regulating the price and supply of crude oil any longer. Thirdly, new supply push has come from Africa, Iraq as well as the likelihood of Iran being brought back into the global trade circuit.