Crude and OPEC
Nov., 2014
The crude oil benchmarksextended their recent declines on Tuesday with WTI plunging by over 2 percent for the session. Newswires tied the drop to a lack of action by OPEC members at a gathering ahead of the more significant pow-wow set to take place later in the week. The plunge in crude prices over recent months has bolstered speculation that producers may respond with supply cuts. Yet further inaction could leave ample supply expectations to persist, which could in turn keep pressure on the commodity.
Also in energy space; natural gas witnessed an astounding rebound of more than 6 percent with media sources citing expectations for another blast of US cold weather as a likely catalyst. Yet in the absence of a meaningful shift in the supply story there is some doubt over the prospect of continued gains for the commodity.
While Secretary of State John Kerry praised a group of negotiators for their considerable progress in discussions with Iranian representatives, the deadline for a decision has been pushed back to June of next year. Considering Iran’s vehement refusal to reduce production rates ahead of Thursday’s OPEC meeting, it’s looking less and less likely the organization will choose to cut production in the near future.
According to Russian news, Russian officials have agreed to reduce output next year by as much as 300,000 barrels a day if OPEC agrees to cut their output next year by 1.4 million barrels a day. Contributing roughly 10 percent of the world’s crude oil, Russia’s offer could significantly alter the price of fuel if accepted.