Over the past couple of days, every now and then Russia has apparently raised the proposals for a 5% curtail in the production beside OPEC, this advancement has brought in a little relief in crude price over the short term than others catalysts for tighter markets such as stronger global growth or falling non-OPEC supply.
Stronger global growth and OPEC supply - would you really think that it bring in any sort of relief to crude.
But, oil's rally seems well ahead of reality in that a Russia-OPEC accord faces several hindrances, namely,
On supply front, the barriers of enforcing cuts in a country like Russia with multiple producers.
The willingness of Iran to share in cuts when it has only just been given license to increase output after nuclear sanctions were lifted.
The Chinese slowdown to persist, which is the highest consumer of this energy product.
However, despite these efforts to cushion oil prices, US crude oil prices slid below $30 a barrel yesterday, after a meeting between oil ministers from Saudi Arabia and Venezuela over the weekend reportedly accomplished little headway toward reaching an agreement that could curtail near-record high production by OPEC.
More broadly, Texas light, sweet futures have crashed nearly 20% since the start of the new year.
The folly of boosting prices before the US shale industry (or even higher-cost Canada and the North Sea) has been permanently impaired.
So we haven't reconsidered our stance on the WTI crude oil price anywhere above 35 in near future and think crude would move back below 30/barrel shortly to head towards our recent targets at the magic number of $25 a barrel.
