Oil on Tuesday shot up after OPEC and the IEA made announcements. In London, Brent on November contracts was trading at $52.16 per barrel and WTI reached $48.99 per barrel during yesterday’s trades in New York.
OPEC and the IEA both announced that they have reduced investment in oil extraction due to a fall in the price of oil. Both organisations stated that the decline in investment is due to be around 20-22% by the end of the year: an unseen phenomenon. Correspondingly, the reduction in investment in the industry will lead to a fall in the market supply of oil next year and thus will lead to a rise in the price of oil. OPEC reckons that a rise in prices will take place in the beginning of next year.
The cartel also announced that a meeting of the organisation’s members will take place on 21st October, 2015 in Vienna. Participants in the meeting are set to discuss the current market situation. The next planned meeting, set for 4th December, 2015, is where member states will set quotas.
Today the growth in oil quotes continues with Brent on November contracts trading around $52.7 per barrel and WTI with November delivery reaching $49.5 per barrel.
Further movements in oil prices will depend on statistics based on US oil reserves which will be out at 23:30 EET. A fall in reserves will aid growth and a rise in them will restrict further growth. On the whole, we see technical levels which are set to hinder growth in the quotes and only after these technical factors have been overcome will we see the bulls having more opportunity to push on. For North Sea oil this means $53.5 per barrel and $51 for Texan oil.