Drum Roll Please…… The Big Announcement Is Here

This morning, we woke up to learn that OPEC agreed to extend production cuts through March of 2018.  In order to wage the continued war against a stubborn market, it was clear cut that OPEC needed to continue its fight to level-out supply & demand. Since the beginning of the year, many analysts have identified factors which could hinder OPEC from beating the supply glut.

Just to name a few factors:

  • Factor 1: Increased production in the United States, Libya and Nigeria
  • Factor 2: Production uncertainty from non-OPEC nations such as Russia
  • Factor 3: Limited space to store excess crude (crude vessels waiting to unload for weeks)

The question at hand today is, now that OPEC decided to extend production cuts why is the market starting to trade down so heavily? Especially if the extension of cuts was expected to create bullish sentiment?  

It seems clear that a majority of investors already placed their bets weeks ago for OPEC to continue its cuts past June. However, a lot of folks were hoping that OPEC would decide to cut even more volume than before and since that didn’t happen it looks like the market has turned over to the bears. In addition, Libya and Nigeria have been granted amnesty in regards to this production agreement. Libya and Nigeria have been ramping up production this year, so this could potentially give another reason for the bears to stomp all over the market.

If you are an adamant follower of the markets, you are probably not surprised to see refined products trading down 3.0-4.0 cents and WTI crude trading below the pertinent $50 level.

The one major unknown that still remains is what will non-OPEC members do in regards to their production levels? OPEC may be the big bad Oil Cartel, however it is important to remember that there are a lot of other countries such as Russia that have their own agenda to keep in mind.


Written by:

As Director of Marketing for Guttman Holdings, I lead our advertising, digital marketing, branding, and public relations strategies, and share my expertise to communicate key messaging to all our stakeholders. With my diversified leadership background, I also drive innovation and cutting-edge business practice and results, to generate interest in Guttman Energy, Guttman Renewables, and Source One service offerings.

Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED “AS IS,” WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.