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Crude Oil Falls on OPEC Supply News

oil, crudeCrude oil futures fell Tuesday morning during Asian trade hours. Traders are digesting headlines that the world’s largest oil cartel Organization of the Petroleum Exporting Countries (OPEC) along with its key non-member ally, Russia, will gradually raise production levels.

This will be to counter supply loss from OPEC member Venezuela and possible sanctions against Iran which could disrupt their supply. Supply curbs have been in place since 2017.

As of 12:30 am GMT, the international benchmark, WTI Brent crude was down 29 cents or 0.4 percent from its last settlement. It was last trading at $78.05 per barrel.

U.S. West Texas Intermediate (WTI) crude futures were also lower. They were down 22 cents from their last close. They were trading at $65.63 a barrel.

Crude Oil Traders react to OPEC and Russian Supply Headlines

The Organization of the Petroleum Exporting Countries (OPEC) with a group of non-OPEC member lead by Russia began to withhold oil production in 2017. This scheme to reduce supply was started to curb a global supply glut. It was also to shore up the price of the black gold.

There has been a rebound in oil prices from their below $30 per barrel. This was the low set back in 2016. OPEC, along with Russia, is scheduled to convene a meeting on June 22. They are meeting at the OPEC headquarters in Vienna, Austria, and will discuss policy going forward.

The other headline for global oil markets is the ever growing trade war, or threat of, between the United States and China. Both countries are threatening tariffs on each other’s’ products.

If this happens, China will respond to U.S. tariffs. They will slap a 25 percent duty on U.S. oil imports. Oil production in the United States has been rising sharply since 2017. The U.S. oil industry is now worth nearly $1 billion per month.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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