Oil Prices Rally After Friday Losses
Following a Friday price loss of 2.5 percent, oil investors experienced a weekend marked by considerable uncertainty. As of early trading on Monday, however, the price of a barrel of light, sweet crude had already risen by 0.7 percent, making up for some of the losses at the end of the last trading week.
In large part, the uncertainty surrounding oil prices has been the result of impending decisions from the OPEC nations regarding the possibility of production caps. Though an output limit has already been in force for some time, it has not, up to now, been comprehensive. Specifically, Nigeria and Libya have been exempt due to their revenue needs. Both countries have suffered major economic setbacks thanks to internal military uprisings and insurgencies over the past several years. As of Monday morning, Nigeria had tentatively agreed to cap its production at 1.8 million barrel per day.
Another option that has been presented by the OPEC member nations is the possibility of extending the current cuts beyond their current expiry date. As of now, the cuts that went into effect at the beginning of this year are scheduled to hold until the end of the first quarter in 2018. These cuts included both OPEC and some non-OPEC oil producers, the latter category most prominently including Russia.
Though the news of potential cut extensions and participation from Nigeria allowed oil prices to rally somewhat, they offered little hope of a general turnaround from the severely depressed pricing that the commodity has experienced over the past year and a half. The price per barrel has not ranged above $50 since the beginning of the second quarter of this year.
Another element in the current oil pricing dynamic may well be looming on the horizon in the form of US oil sanctions against Venezuela. The politically unstable South American country remains one of the larger producers of oil worldwide. However, American President Donald Trump has floated the possibility of enacting sanctions if Venezuelan President Nicolas Maduro proceeds with his plans to heavily amend the country’s constitution. The US, at present, buys roughly 780,000 barrels of oil from Venezuela per day. Many analysts conclude that such a sanction could cement the collapse of the Venezuelan economy, an event which would have substantial implications for the global oil market.
Thus for our traders, we can highly recommend that you a close eye on the oil price, especially the up binary options short term.