OPEC's Slash in Output Sparks Oil Rally
Posted on 18. Dec, 2008 by admin in Crude Oil, Forex News
A massive production cut by OPEC help boost the price of Crude Oil yesterday. This was in reaction to the cartel agreeing to reduce Crude supplies by 2.2 million barrels per day. This was the largest cut announced in the cartel’s history. OPEC’s large output cut led to a 450 pip rise in Crude prices to $44.73 a barrel at around 23:00 GMT last night. Many analysts agree that non-member oil producing countries are likely to follow through on the tough talk.
Traders are still wondering if the drop in Crude prices may reverse in the near future. Oil prices have fallen below most analysts’ expectations in the past two months and there is a possibility that prices may continue to drop to $30 without further fundamental support. Potentially prices may be significantly boosted in the next several months if there is an increase in demand and more dramatic supply cuts.
The fall in the Dollar also helped increase the price of Crude last night. A number of analysts point to the correlation to a falling Dollar and an increase Crude Oil prices. Thus the recent drop in the Dollar supported the spike in the price of the commodity late in last nights trading.
