Crude oil prices have eased back at the start of this week, with a barrel of Brent costing $62.25 and WTI $57.25. From their post-OPEC highs, Brent was $1.90 lower and WTI was $1.60 worse off at the time of this writing.
Oil prices are responding positively to an extension of the current OPEC/Non-OPEC production deal, especially because Nigeria and Libya agreed to cap production, but a monthly report by the Energy Information Administration (EIA) on U.S. production rising over 3% to 9.48 million barrels a day seemed to put a bit of a wet blanket on the markets' enthusiasm. Not to mention a million barrels of hedged shale oil output.
OPEC and Non-OPEC sources announced that they have agreed to extend production cut until the end of 2018, but will review the situation in June to make sure that the cuts are not causing larger problems for the Cartel.
Crude oil prices are getting geared up for the OPEC/Non-OPEC meeting in Vienna, Austria. At this meeting it is widely expected that the players involved will extend cuts throughout the rest of next year, despite some lingering geo-political and shale oil concerns. This meeting comes as oil prices pull back from a two-and-a-half-year high and global supply is tightening.
Business and users of crude oil that did not buy into the lower for longer talk are giving thanks this Thanksgiving for having hedged their oil, gasoline and diesel purchases. Suddenly, the oil glut that many had predicted would last forever has suddenly turned into a very tight market.
After being extremely overbought with a record amount of hedge fund and large speculators long caused a sell-off after a questionable report from the International Energy Agency’s, Traders hoping that the American Petroleum Institute weekly supply report would perhaps add some clarity only added to the confusion. In a major mixed bag of a report, the API reported massive and unexpected 6.513 million barrels increase in weekly supply.