There has been a nice bullish rally in the oil market from the very beginning of this year as OPEC implement oil cap policy in the global economy. Most of the oil investors made a decent profit in the global market by executing their long orders in the market. After hitting the critical low at 26.90 the price oil rallied significantly higher in the global economy despite the prevailing oversupply problem. But things have settled down to a great extent after the vigorous action from OPEC and the market has not since such a drastic action since 2008.Most of the leading economist in the global market is known thinking that the price of oil might rally higher in the near term future if OPEC manages to control the oversupply problem in the global economy. The current supply is exceeding the current demand of the market and the producers are still in the completion of mass scale production. The conservative oil investors are in fear since a strong bearish threat is imminent to the energy field if such problem persists for a prolonged period of time.
The crude surge higher: In the last Friday the price of crude oil rallied higher in the global market and secured a gain of 1 percent in the global economy. The crude futures gained near about $0.73 in the global economy and traded at $53.33 barrel on the New York Mercantile Exchange. On the other hand, the price of Brent gained near about 78 cents in the global market and traded at $55.86 a barrel in the London intercontinental exchange. Most of the oil investors are considering this gain as temporary gains since the leading oil producing countries like U.S is still contributing to the excess supply problem of oil in the global market. However, in the last week, the oil market rallied higher prior to the market closing as the green bucks retreated from most of its major rivals in the global economy after the speech from the FED chairperson Janet Yellen. According to leading oil investors in the world, the price of oil has might face strong bearish pressure in the global economy at any moment. The technical strategist is also telling that the price might tumble in near future and will break critical support levels in the market creating a fresh selling pressure in the market. To be precise the most of the oil investors are currently in sideline and waiting for more précised clue to trade the market.
U.S crude stockpile: The energy field was under extreme bearish pressure in the global market from the very beginning of the year 2016, however, things have settled down to great extent after OPEC effort. However, the number of oil rigs in the U.S is now 609 which was only 12 at the very beginning of the year 2016.Such a drastic rise in the number of oil rigs in the U.S economy has created a strong panic into the mind of oil investors since production from those rigs will create strong selling pressure in the oil market. All the professional oil investors are currently out of the market since the market might fall at any time without giving any prior signal. Technically the market has broken the triangle support and level and most likely to fall in near future. According to the Energy Information Energy (EIA), there has been a massive stock of crude in the U.S economy for near about 520.2 million barrels and such a huge data is definitely going to worsen the current oversupply problem of oil in the global economy.
Actions from leading oil producers: Most of the leading oil producing countries in the global economy has highly appreciated OPEC decision regarding oil cap in the production line to bring stability in the energy field. Kuwait has already announced that they limit their current production of oil in the global market more than they promised. On the contrary Saudi Arabia has also stated that they have also limited their current production and most likely to contribute further in near term future by seizing their production rate. Though this leading two oil producing countries in the world have shown an extreme level of promise to bring stability in the energy field but Iraq has done the opposite. They have already told to OPEC they are not ready to cut their current production of oil in the global economy since their economy is greatly dependent upon the oil industry. However, they have shown a nice level of commitment to OPEC decision by stating that they will limit their production once they achieve stable economic performance. On the contrary, the number of active oil rigs has also become one of the major issues in the global market as active production will intensify the current oversupply problem.
Summary: Most of the oil investors in the global economy are now in doubt about the next movement of the oil price. However, things have settled down to a great extent after OPEC declared the oil cap production in the global economy. Most of the leading oil producing countries have well appreciated this decision and countries like Kuwait and Saudi Arabia has already limited their current production rate more than they promised. Though the number of active oil rigs in the U.S economy is shockingly high but the US government has also stated that they will maintain tight supply in the production line.