Is the Oil Output Deal Working Too Well?

When OPEC and Russia meet this weekend to review their strategy for clearing a global oil glut, they’ll face an unusual problem: it could be working just a bit too well.As their output cuts, coupled with robust global demand, tighten the market, crude prices have soared to a three-year high near $70 a barrel. That’s prompted warnings — from Iran’s oil minister to Goldman Sachs Group Inc. — of a fresh surge in U.S. production, wrecking all of OPEC’s hard work.

“The big concern is prices — are they worried about prices going too high too quickly?” said Mike Wittner, head of oil-market research at Societe Generale SA in New York. “There are many reasons they’d be concerned, but top of the list is: how will U.S. production respond?”

Source: OPEC-Russia Oil Deal Faces a New Danger: Too Much Winning – Bloomberg

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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