Market - - Dec 02,2016
Oil prices dropped on Friday as the output cut deal between OPEC and Russia turned out to be fruitful; proper implementation is over underway.
Last week, there were serious tensions regarding the OPEC meet which was rescheduled due to Saudi Arabia’s exit and Russia’s worry regarding the output slash. But the story has turned out to be quite peaceful after both OPEC and Russia have agreed to curb outputs in order to control the global oversupply of crude oil.
This decision is indeed a helpful step in bringing back the oil market on a sustainable track. On Friday, the oil prices slipped which is viewed as a good start to the upcoming phase.
International Brent crude oil futures LCOc1 were selling at $53.66 per barrel, down 28 cents, which is low by 0.52 percent, from their previous close. On the other hand, U.S. West Texas Intermediate (WTI) futures CLc1 were trading at $50.92; down by 14 cents, or precisely 0.27 percent.
The implementation of the deal will be the root to acquire long term stability in the oil market. The agreement involves OPEC and Russia both to reduce crude production by 1.5 million barrels per day.
Traders and investors are optimistic about the decision which has started to highlight quick results. Chief market strategist at CMC Markets, Ric Spooner said "This is positive news that will make a sustainable difference to the oil market over the coming months," said Ric Spooner, chief market strategist at CMC Markets. He also added that, the market will also experience momentum pick up in the coming days which shouldn’t be surprising.
This was OPEC’s first oil output reduction in the last eight years. The deal also includes the organization’s first integrated action with a non-OPEC member in the past 15 years.