Major Questions Surround Oil As OPEC’s Next Meeting Looms

By: Spencer Israel

 A report from Reuters that OPEC would consider a more extensive oil supply cut sent oil futures rallying to its highest levels in two weeks on Tuesday, providing the market more clarity on what the group plans on discussing at their meeting in December.

The group is apparently worried about the impact of the U.S. and China trade war on global crude prices. OPEC, along with a group of non-members including Russia and Mexico, had previously agreed to reduce oil production by 1.2 million barrels per day until March 2020. Though Iran, Libya, and Venezuela were exempted from that agreement, the sources said Saudi Arabia would want to make sure all member nations commit to lowering production before more cuts are instituted.

The cuts were meant to stabilize the price of oil, and it worked until about one year ago. From the time the cuts began at the start of 2017 to October 2018, the price of Brent Crude oil rose approximately 43% while West Texas Intermediate increased 55%.

But that sentiment has turned. In the last 12 months Brent and WTI have fallen 30% and 23% respectively, as concerns over weakening global demand have tempered 2020 forecasts and weighed heavily on markets. Even the mid-September rally in oil was short-lived. Despite a 15% overnight rally after a drone strike at a Saudi Aramco facility knocked out 5% of global output, oil was back at its pre-attack levels within one week.

Not helping matters is the continued production stateside, as U.S. shale inventories recently hit 9.28 million barrels after rising for five straight weeks. And between that oversupply and softening demand, traders are taking notice.

According to the CFTC, bearish crude contracts outnumbered bullish crude contracts by over 86,000 the week of Oct. 15, marking the most bearish turn for oil futures since January.

OPEC leaders will be discussing all of this when they meet in Vienna from Dec. 5-6. The cartel will have to find another lever to pull if they want to keep oil markets stabilized. And the clock is ticking.

Active Trading with Lightspeed

Lightspeed, a division of Lime Brokerage, provides active traders with all the tools required to help them find success in stock trading, and we have been developing and honing our active trader platform to offer an optimal user experience. With the intuitive interface layouts and institutional quality stock and options scanners, we aim to help traders reach their goals, no matter what their strategy is. We also offer our clients some of the lowest trading fees in the industry.

For more information on a professional trading platform with Lightspeed, please call us at 1-888-577-3123, request a demo or to open an account.

Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.

You may also be interested in...

The IPOX® Week, September 20th, 2021
Read More
Understanding the Basics of Option Pricing
Read More
4 Tips for Maximizing Trading Returns
Read More
The IPOX® Week, September 13th, 2021
Read More

Try the demo

Compare Platforms
Check the background of this firm on FINRA's BrokerCheck

Our website uses cookies to improve the performance of our site, to analyze the traffic to our site, and to personalize your experience of the site. You can control cookies through your browser settings. Please find more information on the cookies used on our site in our Privacy Policy. By clicking OK, you agree to allow us to collect information through cookies.