Oil Inches Forward, but Still Faces a Tough Time
By Anatol Thomas
The oil price has been suffering for quite a few months now. The OPEC production cuts are not helping the oil price in the market because of disappointing API inventory data. On Friday, oil inched slightly in the forward direction compared to the trading situation in the past week. Even though the commodity struggles to gain in the market, the first half decline is the worst that oil has faced in the past 20 years. This situation is much worse because OPEC has been urging oil producers to cut down production for the past six months.
The Brent Crude futures gained 0.2% and was trading at $45.33. WTI crude features also gained 0.2% and it was traded at $42.83 per barrel. In this year alone, the oil price has gone down by 20% and the OPEC actions were futile. The OPEC oil producing countries have reduced oil production by 1.8 million barrels per day and this has been in effect since January.
Previously in 1997, crude oil was facing a worse situation due to the financial crisis in Asia coupled with increased oil output. After 20 years, the same situation repeats again even though global markets are currently improving. OPEC is urging its members and non-members to extend production cut deals until the first quarter of the next year.
The market investors question the authority of OPEC because the market is being saturated since 2014 when the production was continuously greater than the consumption.
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