OPEC is destructing itself, American producers can celebrate

Today as well are the global financial markets living by the news that the representatives of Organization of the petroleum exporting countries (OPEC) had agreed on lowering the oil production.

The production should be lowered by 1.2 million barrels to 32.5 million barrels per day. It is the first tightening of the oil production by OPEC cartel since the year 2008. Moreover, Russia should also join the agreement as non-member country of the cartel. Russian production should shrink by 300 000 barrels a day.

However I still think that this step won’t make any significant gap in the oil market. First, there is no guarantee the agreement will be really respected. And second, even if it is respected and it makes a significant gap, the American producers of shale oil would willingly fill it up.

 
That’s why I am not afraid of the oil getting significantly more expensive in the long term. But the market sees it differently… And the price of oil Brent was growing to the 6-week maximum above 53 dollars per barrel.