Tuesday December 27, 2016

I've Been Thinking:

Let's talk about oil prices.

The price of oil per barrel hit a 17 month high on Friday and settled down at about $53 per barrel.

The big question is how the OPEC oil production cut will impact the price of oil. As of January 1, 2017 OPEC will reduce production by 1.8 million barrels per day.

At the same time, over the past few weeks Libya has increased their production by 22,000 barrels per day. And most importantly, Russia has increased production by 5%.

One can only expect that Russia will try to increase their profits by increasing their production to fill the need created by the OPEC reductions.
If that is what happens, OPEC will have misplayed the entire situation.

OPEC originally went to Russia to explain their production cut. Everyone thought Russia was on board, but it doesn't look that way at all right now. Russia is ready to pounce.

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