OPEC Unlikely to Make Production Cuts, Consensus Says
Members of the Organization of the Petroleum Exporting Countries (OPEC) will be meeting on the 27th, and no doubt the discussion will center on whether to curb production to help oil prices recover. However, a new poll shows that commodity and energy investors do not believe such a cut will occur. According to BMO Capital Markets, 87% of those polled believed that no cut would be agreed on. Even those who said a cut would happen believed it would be no more than a million barrels a day, an insignificant amount.
Of course, this is merely a poll, but we might be looking at cheap oil and gas for an indefinite amount of time, with a bottom possibly reached sometime between now and February.
In the meantime, American producers will continue to pour out record levels of oil, and President Vladimir Putin’s antics in Ukraine will continue to stir up geopolitical tension. Saudi Arabia appears to be more aligned with Europe and the U.S. against Russia, Syria and Iran.
All of this short-term activity might be bad for the fracking industry, but the big winners are consumers and investors. We’re in a steady, modest expansion of our economy and this is good for investing in domestic stocks.