The events of the past week in the oil markets have many people looking at OPEC cuts, market on virus watch and other factors that are affecting oil prices. In fact this is just the beginning of what we can expect to see in the near future. So what is it going to take to raise the price of oil?
In my opinion and through many discussions with experts, OPEC cuts will do nothing for oil prices. This is a low oil price environment and I do not believe OPEC can pull a rabbit out of a hat and return us to over $100 per barrel. Well, I am not alone in my opinion as a large number of experts across the globe to agree with me.
If you look around the world, the oil producing nations are struggling with a lack of production and countries like Venezuela are in serious trouble with shortages of gasoline, and high inflation rates and things are only getting worse. That does not bode well for prices or for the economy of these countries.
So we should expect oil prices to go higher in the coming weeks. But when?
One thing that everyone is looking at is when OPEC cuts their production. OPEC is having a tough time meeting demand. Oil production has fallen off sharply in the last couple of years.
Also, in my opinion, the global demand growth has slowed dramatically. Even China has stated that its consumption of oil will slow in the next three to five years.
Many analysts and think tanks agree that the price of oil will move higher in the next few months or years due to global demand, economic factors and OPEC cuts. I am not an expert, but my guess is that this increase will be very small and very short lived. We are still in a very weak financial environment, but the prices of oil will likely rise.
Refineries are in trouble due to lower oil prices. They have been trying to find alternative sources for fuel and finding them is quite difficult.
Remember all the companies that were planning to expand and grow their operations in North America, but this plan was killed by oil prices? I am sure that this is just one more example of how the markets are acting right now.
As we have seen in the past, oil prices spike up in one area, then go back down a bit and then rise again. You can easily predict that oil prices will continue to rise until OPEC and other producers in the world to find alternative sources of fuel.
The fact is that we are facing a world where there are many things moving at once. Oil prices and the price of everything else could go higher or lower in the coming months and year.