Almost 60% of the world’s oil producers gathered in Doha on Aril 17 to discuss freezing their production output at January levels in effort to stabilize prices. Russia, Saudi Arabia, Qatar, and Venezuela made a preliminary deal in February and were seeking to add more producers and extend the recent price recovery.
The oil producers failed to reach an agreement to freeze production. Just after the futures market opened Monday. April 18th around 6 P.M. ET, West Texas Intermediate fell 6% to a low of $39.02. However, by the close on Monday he price had risen to $40.36 or producing only a 4% decline since April 12th recent high.
Some of the headlines said, “Crude Crashes…” or “Crude Oil Plunges…” A 4% drop to $40.36 from the April 12th high, hardly seems like a crash, but the news must be sold.
A several mediating factors may be at work.
- Striking oil workers disable 60% of Kuwait’s production
- U.S. production drops below 9 million bpd law week according to EIA
- Canada oil industry to see 62% decline in investment
- Drop in non-OPEC supply should accelerate through rest of year and into 2017
In conclusion, regardless of what didn’t happen in Doha, the market is starting to rebalance. And read the news, not just the headline.