Thursday, February 18, 2016
Oil: Opec - Eating The Cake And Still Keeping It?
But now we hear a new strategy. Apparently Opec members, including Saudi Arabia, and non-Opec producer Russia had agreed to curb production in order to raise the price of oil again. It seem they are trying to have their cake and eat it (wikipedia).
Opec cannot have it both - a shrinking US oil production and a rising oil price. If the current oil price rally continues it would work like a rescue mission for the frackers. The remaining US frackers will keep on pumping and those who had stopped pumping will produce again.
A rising oil prices will reduce their losses and even bring more profits. As a result the US oil production will climb again, aggravating the global oil glut - and a new oil collapse will be in the making.