Crude Oil Production Cuts Might Be Extended for 12 Months
Crude oil futures
December WTI (West Texas Intermediate) crude oil (UWT) (USO) (OIL) futures contracts fell 0.05% and were trading at $57.32 per barrel in electronic exchange at 1:10 AM EST on November 7, 2017. On the other hand, December 2017 E-Mini S&P 500 (SPY) futures rose 0.15% to 2,593 in an electronic exchange.
Meanwhile, the S&P 500 rose 0.13% to 2,591.13 on November 6, 2017. The Dow Jones Industrial Average (DIA) rose 0.04% to 23,548.42 on the same day. The NASDAQ (QQQ) rose 0.33% to 6,786.44 on the same day. All three of the indices closed at a record level on November 6, 2017. The strong 3Q17 earnings results have been driving Wall Street.
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OPEC’s meeting and crude oil prices
OPEC’s meeting will be on November 30, 2017. Major oil producers like Saudi Arabia, Russia, Iraq, Kuwait, and Nigeria have signaled extending the current production cuts nine more months. Major producers might officially declare the production cut extension at this meeting.
The production cuts have helped tighten global supplies and reduce US and global crude oil inventories. Brent (BNO) and WTI oil prices (DBO) (DWT) (SCO) have risen more than ~30% since the lows in June 2017 due to the productions cuts, supply outages, and improving global crude oil demand.
Some traders think that OPEC might extend the production cuts for 12 more months. However, some traders think that OPEC might even cap production after the production cuts expire. The longer-than-expected production cuts are bullish for oil prices. Higher compliance with the pledged cuts will benefit oil prices. If OPEC doesn’t extend the production cuts on November 30, 2017, we could see lower crude oil prices.
In the next part, we’ll discuss US crude oil inventories and Iraq’s crude oil production.