The meeting which was set way back late September this year at the conclusion of the International Energy Forum in Algiers raised market expectation on the much talked about oil output cut outlook. It was initially agreed upon then that the Organization is to reach a goal of decreasing their oil output to around 32.5 million to 33 million barrels per day.
The U.S West Texas Intermediate(WTI) crude oil futures dropped by 8 cents to $47.95 per barrel from a recent day’s high of $48.30 during early Wednesday trading while the International Brent crude oil futures also posted a decline of 8 cents to $49.04 from an initial $49.42 per barrel earlier the same day although the January Brent crude in London posted a gain of up to 22 cents to $49.12 per barrel.
The surge to the $49 price level was led last week by positive comments from Russia’s President Vladimir Putin that Russia, despite not being an OPEC country would freeze their production output. President Putin also stated that he sees a very high chance of an agreement to freeze production being reached by the end of the formal meeting this coming November 30.
An agreement to cut oil production within OPEC countries would reduce the current numbers by more than one million barrels per day. This would stabilize oil prices which have dropped to new lows for the past year. Although a good number of OPEC member countries have made their statements as a show of support in a potential oil production freeze, OPEC member countries such as Iraq and Iran have made it clear that they would not be agreeing to an output cut being imposed in the production of their countries. The two countries also announced their intention to increase their output instead. According to a statement from Iraq’s foreign minister, they believe that OPEC should let the country increase their production without any reservations.
This has led the markets, investors, and analysts to raise their doubts on the possibility of an oil production cut. Reportedly, Indonesia also has made statements regarding their sentiments and reservations regarding an oil production cut.
Crude Oil Price Direction
Crude oil prices which have declined on output statements from OPEC countries such as Iran and Iraq have shown a downward trend erasing the gains of the commodity from the news that the OPEC shall agree to open a formal meeting regarding an oil production freeze.
From the price surging to as much as $51 after the conclusion of the Algiers meeting back in September, crude oil prices have plummeted to as low as $42 as Iran and Iraq among other countries have made their statement regarding their intention to raise their output and their wish to be excluded from a potential production cut. This has continuously raised market doubts on the possibility of the OPEC outlook.
Although the price have continuously tried to recover in the previous weeks and trading sessions, it was only till a statement and comments from Russian President Putin regarding their country’s intention to increase output despite not being a member of the organization has led the price to jump back to as much as $49 recovering from its recent decline. Putin also then stated that he strongly believes in an agreement being reached by November 30. Crude Oil prices which have surged to as much as $45 is now currently trading at around $48 posting a near recovery back to its recent high of $51 which will lead overall prices to a full recovery as November 30 comes to a close.