With OPEC members pumping out at full capacity and the geopolitical situation in many oil producing countries continuing to be unstable, we may begin seeing cracks in the oil market. Citibank representative Ed Morse says that:
“Fear in the market has been that OPEC production will rise dramatically,” said Morse. However, “there could be a supply gap emerging, which could point to a tighter market,” he said in Singapore on the sidelines of the S&P Global Platts APPEC Conference. If the output reductions are prolonged, that would only hasten the prospect of a tighter market, said Morse, adding that the source of the supply squeeze will probably be OPEC rather than producers outside the group. “There’s no room for them to do more,” he said, referring to the five nations.
The result could be a dramatic fluctuation in oil prices in the years to come. Issues have been emerging in the oil market as countries like Russia and Saudi Arabia have attempted to pump their way out of low pricing. Commodity investors should take time to look into Citibank’s report and weigh their future trade’s carefully.
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