"OPEC will reduce production by 1.2 million barrels a day to 32.5 million a day, a delegate said Wednesday in Vienna, asking not to be identified as the decision isn’t yet public. Oil jumped 7.6 percent to $49.90 a barrel in London at 1:23 p.m. local time" - Bloomberg
Promising? I'm not so sure. History as shown it is usually smart to be on the other side of this trade. Would be shocking if the deal was to go through and no one cheat. Hey, but stranger things have happened this year.
Your thoughts?
I was just about to create another topic on this. I think it's very interesting, because part of the reason they ramped up production was to make it not economical for America to export (among other reasons, I think Saudi Arabia was trying to punish Syria & its allies), so now that they've curbed production, will any incremental gains from higher prices be taken away because of American energy resurgence? will be interesting to see.
I believe happypantsmcgee was a O&G guy, would be curious to get his take
They are doing it the way they should, in my opinion. Holding the cuts for 6 months before reevaluating at the next meeting in May should give them enough time to see the US producers' rig response (although not much on the production). I think that as long as you don't start to see rigs returning to the Eagle Ford or Bakken, even if they continue to flood to the Permian, OPEC will extend their cuts for 6 months. They are essentially doing this to test the efficiency of the US producer and then will incrementally walk up the price after that until they see where the next US basin can enter the market.
Right now, this is more about reducing inventories than it is about finding a floor price for the market...that will come next.
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