Prices of crude oil futures recently hit a $52 mark days after the Organization of Petroleum Exporting Countries made an agreement with non-OPEC countries such as Russia to reduce their production. Russia who is one of the biggest non-OPEC producers has recently agreed to cut their daily oil production by as much as 1.2 million barrels.
The formal meeting last November 30 in Vienna between OPEC member countries concluded with a deal to cut back oil production to stabilize oil prices. The West Texas Intermediate(WTI) have since then climbed into an upward trend from a $45 to as much as $52.12 up by 22 more cents or 0.4% strengthening the prices claim to recovery to up to $60. This has been the target price of most OPEC experts and members.
Brent Crude Futures meanwhile have gained to as much $54.92 despite losing 0.5% or 29 cents. Last week, oil prices have hit a 17-month high since the on the announcement of the OPEC agreement to cut oil production by as much 1.8 million along with non-OPEC countries starting next year.
Although a $60 price recovery is seen as a big success for the organization, some are still hoping for the prices to peak to as much as $100 which has not been seen on crude oil futures since last 2014.
Oil prices are also steady amidst the holiday season as markets awaited more updates or figures from the shale fields U.S. production if they would be sufficient enough to balance the organization’s plan to reduce production by next year.
Crude Oil Price Direction
A couple of analysts have already debated the strong outlook that will lead oil prices to surge further by as early as January next year. The probability of the prices reaching to a close of $60 are also strongly supported now by analysts and some investors staking a stronger claim at the $70 level.
At the moment, the main concern among the market which will likely raise doubts on the price recovering back higher is the actual implementation and action which will be taken by the OPEC and the participating countries in the next couple of weeks. Failure to show positive actions geared towards actually making production cuts will lead to the crude oil prices wavering from recovery.
The chart below illustrates that the oil prices have climbed from a decline prior to the Vienna meeting on rising investor doubt. Crude oil futures have now inched higher at $53.14 to up to $53.23.
Although reducing the output to as much as 1.2 million to 1.8 million barrels per day collectively and another 500,000 barrels a day from non-OPEC members serves as a challenge, the compliance of the countries also posts bigger threats to the agreement which sent oil prices to surge.