The Organization of the Petroleum Exporting Countries (OPEC), has recently increased by 8.4 percent the number of oil and gas wells in production despite already exceeding production quotas. OPEC implemented record production cuts as demand for oil evaporated during the height of the recession. Since then, oil prices have more than doubled and it would seem that some OPEC members are happy enough with current prices, and are willing to increase production to increase overall revenues.
This line of thinking has some analysts predicting oil prices will stabilize or even drop over the next few years due to increased supply. Leo Drollas, deputy director of the Center for Gloabl Energy Studies said that Brent crude will fall 25 percent to $60 in the fourth quarter of this year, and if OPEC can’t gain control of production, prices could fall to $50 a barrel by 2015.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.