OPEC Planning Further Production Cuts?
Posted on 27. Apr, 2009 by admin in Crude Oil
After failing to breach the resistance level of $52 a barrel last week, the price of Crude Oil appears to be coming back down. Recent press releases from the various oil ministers in member countries of the Organization of Petroleum Exporting Countries (OPEC) have stated that the latest price volatility has been damaging to the future of the oil industry. Such volatile price swings as those seen over the past 8 months can cause irreparable carnage to an industry in need of heavy foreign investment.
Without clear data regarding the current supply and demand levels in the world’s energy supplies, organizations such as OPEC have little to go on but recent price levels. If prices don’t find strong support in the coming weeks, the cartel may be forced to call for further production cuts in order to boost prices back to levels where investment becomes feasible. If oil prices continue where they are, this move may be more likely. Traders need to keep an eye on hawkish statements such as these from members of OPEC as it could signal a shift towards further production cuts, and the possibility of an increase in the value of Crude Oil.
