As you probably know, last Thursday, OPEC and their non-OPEC fellow decided to extend the so-called Vienna Accord during the recent summit in the capital of Austria. The mentioned agreement implies cutting oil production in order to back higher oil prices in the near future. The agreement was extended for 9 months – until the end of March 2018.
The previous agreement is about to expire in June 2017. Still, it has failed to let the OPEC reach the goal. Basically, that’s why international experts were convinced that the cartel would extend the agreement.
According a British expert, the effect may be reduced to nothing in case Russia or Saudi Arabia start producing more oil despite the agreement. The same holds true if American shale oil companies start expanding their oil production and making up for the production cuts coming from the agreement participants. If that’s the case, the oversupply is likely to last until 2019.
At the same time, it’s necessary to mention that some investors anticipated further production cuts along with extending the agreement. However, they eventually failed. The production cuts had stayed the same at 1,8 million barrels a day.
As a result, Brent oil dropped more than 3% down to 52 dollars per barrel on Wednesday evening. Still, the current downtrend of Brent oil seen on the H4 chart can be considered as a retracement to a long-term term rally, Masterforex-V Academy experts report.
