As oil prices reached their lowest levels since May 2003, OPEC oil ministers – led by the United Arab Emirates – called for production cuts to prop up prices. Prices rose about 4.6% on the news. The problem was that no OPEC nation wanted to cut production. Venezuela is bankrupt and needs to pump as much oil as it can to support the failing government. Nigeria is involved in an ongoing civil war and desperate for cash. Saudi Arabia is determined to maintain its market share, fearing the U.S. shale producers will displace Saudi crude with their own growing shale-oil production. The price of oil rose to $49 per barrel in anticipation of the June OPEC meeting. But OPEC failed to agree on production cuts. In December 2016, OPEC finally reached an agreement to cut production by 1.2 million barrels per day – from 33.7 million to 32.5 million. Non-OPEC producers, including Russia promised to cut production by 558,000 barrels per day.
No one believed the cuts were sustainable.
Prices swung up and down until they reached $53 per barrel in February 2017 as the cuts seemed to hold.
The problem was the production cuts were not having a marked impact on world oil supplies. Inventories remained at record levels.
U.S. crude oil and gasoline inventories had risen to record highs.
118
Made with FlippingBook - Online Brochure Maker