Oil, OPEC to cut production. Really effect on market?

Oil stocks are increasing month by month, day by day, realizing that was an unbelievable paradox until few years ago. Production keep increasing the offer, but the market can’t absorb it, so there are two questions for OPEC and others oil producers:

  1. Is oil-era going to end next years?
  2. How resolve the problem of large stocks around the world?

Oil-era is not next to the end, for sure, but the offer overcome the supply and the oil prices are reducing in the long term, reducing producers’ profits too and generating the great problem of the stocks, always larger, always more expensive.

So OPEC is probably going to cut the production of oil next month, to reduce the stocking costs and to substain the price, but prices could have no bullish shocks. The cut will no coincide with a real cut of the offer, due to the stocks that remain a large source that could motivate the persistence of prices at lower levels then expected.



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