The oil prices is trading higher in today’s trading session after a report showed that Members of Opec cut the oil output dramatically for the month of January.
The oil cartel announced towards the end of last year they would reduce production to stem the slide in oil prices which has been in free fall and threatened to break below the $50 a barrel mark.
The cuts should ensure for now, that Oil will stay above the $50 mark
OPEC+ has been successful in cutting back production since its peak production in November last year [and] the Brent market has thus firmed up,” said Bjarne Schieldrop, head of commodity strategy at SEB Markets.
Staying above $50 is one thing, but continuing to rally is another,and some in the market think that this may be a tall order considering the amount of oil coming out of the US.
As long as the country continues to release such vat amounts of oil to the market, any major rally in oil may not be forth coming or may be some way off.
“U.S. production is on pace to average 13 million barrels per day in 2020, which puts the nation on track to set a new production record for a third consecutive year,” said EIA Administrator Linda Capuano, in a statement.
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