Crude oil and the Russian Ruble have found themselves at 3-month lows. There are several reasons for that. In particular, OPEC is reported to be producing record-high amounts of crude oil despite the recent verbal agreement to cap and even cut their production in the near future.
At the same time, the U.S. presidential election 2016 ended up with a big surprise, making Donald Trump the 45th President of the United States of America. Experts say that the new administration may well increase the export of crude oil produced in the USA. All of that is making the global market of crude oil oversold, thereby pushing oil prices lower amid increasing oversupply.
On Monday, crude oil spent the trading day trading in the red zone. To be more specific, Brent oil futures for January delivery dropped below $44/b on that day. Apparently, OPEC’s actually oil production increase has been the key bearish driver for oil prices since then. According to several sources, OPEC increased their oil production by as much as 230K barrels a day in October 2016. The new record is 33,83 million barrels a day. OPEC names slightly lower figures, but the essence is the same.
At the same time, the very fact that the global production of crude oil is growing in advance of the forthcoming OPEC summit seems scary to many international observers and market participants. The thing is that in late September, during the unofficial summit in Algeria, OPEC nations agreed to cap the cartel’s oil production to 32,5-33 million barrels. Still, as we can see, the agreement doesn’t seem to be working. Observers start questioning the agreement. They say that the next summit is unlikely to end up with signing the agreement and making it official.
At the same time, BMI Research analysts also assume that OPEC is unlikely to sing the promised agreement during the forthcoming summit. They say the cartel is not going to do it after Donald Trump’s unexpected victory during the U.S. presidential elections. The thing is, Donald Trump is the advocate and supporter of the U.S. energy independence.
PIRA Energy Group experts also say that the market doesn’t trust OPEC’s statements about the forthcoming agreement anymore. In October, oil prices used to be around $55/b supported by the promises to cap the production and shrink the oversupply in the global oil market. Hover, now, the prices are well below $45/b for a number of reasons, including those we have just mentioned.
Masterforex-V Academy experts say that if OPEC eventually fails to sing the agreement, oil prices may well crash all the way down to $35/b and below.
