OPEC Hesitantly Considers Talking About Stopping the Insanity
This week OPEC announced a willingness to talk with world oil producers about oil prices. It was the OPEC oil cartel, chiefly Saudi Arabia, that started the flooding of oil in the world market beginning in November of 2014. But the drop in the price of oil per barrel has acted like a boomerang that hit Saudi and other nations smack in the face. OPEC nations aimed to crush the shale boom in the U.S. but instead have seriously depleted their financial reserves.
What might be considered exciting is that this week’s surge in oil prices is the biggest three-day gain in a quarter of a century. The word that OPEC is prepared to discuss options is what experts believe to be a primary catalyst behind U.S. crude rising $3.98 per barrel to $49.20. The international standard, Brent crude, rose to $53.60 per barrel, up $3.61.
Another, perhaps more significant, factor in the change is that U.S. production has recently dropped. For instance, after a peak of 9.5 million barrels per day in April, the estimated output for July 2016 is 8.6 barrels. Meanwhile, it is guessed by some that demand for oil will increase in 2016 by 1.3 million barrels per day.
There are even more reasons that experts have come up with to explain what’s going on in the oil industry. There is no doubt but that the U.S. has emerged as a major player, even in the midst of this devastating bust.
It remains to be seen whether OPEC will actually stop pushing the boundaries of excess in their drilling practices. To continue is like cutting off the nose to spite the face.
See the resource article for more details at USA Today.