When OPEC and Russia meet this weekend to review their strategy for clearing a global oil glut, they’ll face an unusual problem: it could be working just a bit too well. As their output cuts, coupled with robust global demand, tighten the market, crude prices have soared to a three-year high near $70 a barrel. That’s prompted warnings — from Iran’s oil minister to Goldman Sachs Group Inc (NYSE:GS). — of a fresh surge in U.S. production, wrecking all of OPEC’s hard work.
“The big concern is prices — are they worried about prices going too high too quickly?” said Mike Wittner, head of oil-market research at Societe Generale (PA:SOGN) SA in New York. “There are many reasons they’d be concerned, but top of the list is: How will U.S. production respond?”
Source: OPEC-Russia Oil Deal Faces a New Danger: Too Much Winning – Bloomberg
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.