Oil prices rebound after OPEC promises the cut in production

by Mike Elliot | Wednesday, Nov 9, 2016 | 106 views

Oil prices rebound – On Monday, the price of oil futures increased by as much as 1% after OPEC promised that there will definitely be a cut in oil production. However, the prices continue to trade about $7 below than the high which oil futures made last month as a large number of investors and experts are still doubtful about the feasibility of this oil cut agreement.

Current oil prices

At 0933 GMT, LCOc1 (Brent Crude) reached $46.20 for a barrel which is 1.36% or 62 cents more than its closing on Friday.
CLc1 (West Texas Intermediate Crude) climbed by 1.7% or 75 cents to reach $44.82 for a barrel.
Secretary-General of OPEC said that the group is highly committed to the deal that was made in September in Algeria. In an official statement, the secretary general said that OPEC is committed to Algeria accord that was decided by the group and all the members are looking forward to its proper implementation.

What the experts believe

While OPEC’s secretary-general has said that the members are looking to the implementation of output cut agreement, many of the analysts doubt that even if a cut is actually implemented, it will not be capable of balancing the oil prices in the market.
David Hufton, MD of PVM Oil Associates, has said that marketers have lost the belief that a credible deal will be created by OPEC and the oil prices are already about $8 short of the high that the prices reached after the Algeria meeting. He said that there are several reasons for people losing hope of a credible deal, like record production of oil in the month of October, fighting between Saudi Arabia and Iraq, which has already mentioned that it will not go for any exemption.
As per David, even if the OPEC members are able to reach an agreement, the agreement will still not be able to balance the oil prices.

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