OPEC Production Cut More Likely; Oil Prices Moving Up
Posted on 22. Dec, 2008 by admin in Crude Oil, Forex News
Realizing the lack of trust, many investors have in their ability to follow through with the production decision; the Organization of Petroleum Exporting Countries (OPEC) is now issuing strongly worded statements in which they express determination to stabilize the Crude Oil market. Traders may have begun to believe these claims as falling Oil prices have caused stocks and economic growth to falter in the Persian Gulf states recently.
In order to maintain the recent infrastructure projects undertaken since July, the Gulf States will need higher energy prices to boost revenues. As such, the chances have gotten better that the talk of cutting production will be followed with action on OPEC’s part next month. Combined with the U.S. stimulus package, to be undertaken when Barack Obama takes office later next month, investors are expecting a decrease in Crude Oil stockpiles. With supply expecting to decrease, market forces have begun to ease the price of Oil into an upward direction. Time will tell if this movement has strong enough support.
