Oil price holds following OPEC’s commitment to production drop

Alan Bailey

Petroleum News

Oil prices have remained somewhat level following a decision by the Organization of the Petroleum Exporting Countries to cut oil production rates. During OPEC’s conference on Dec. 7 OPEC and some non-OPEC countries, in particular Russia, agreed to cut production by 1.2 million barrels per day, in view of what the organization said was “a growing imbalance between global oil supply and demand in 2019.” In November OPEC commented that it expected that, going into 2019, oil demand will fall in response to an anticipated slowdown in the growth of the global economy.

That November prediction led to downward pressure on the oil price, thus continuing a downward trend that began in early October. However, the new announcement about planned production cuts caused an immediate jump in the oil price. The price then fell back before stabilizing somewhat. According to the Financial Times, reports of falls in U.S. crude oil inventories have helped support the oil price in recent days.

The price of Brent crude, which tends to track quite close to the market price of Alaska North Slope crude, jumped from around $60 to around $63 on Dec. 7, when OEPC made its announcement. Over the next few days the price sank back to around $60. Since then it has been bouncing around the $60 to $61 level.

- ALAN BAILEY