Despite plans for a production freeze among Organization of Petroleum Exporting Countries (OPEC) and other global producers, oil exchange traded fund investors shouldn’t get their hopes up for a continued surge in crude oil prices after the recent run up.
Over the past three months, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, jumped 15.6% and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, surged 36.2%.
WTI crude oil futures are now trading around $41.7 per barrel while Brent crude futures were at $44.1 per barrel.
Oil prices have been recovering off a 13-year low in February on speculation of a production freeze among the largest oil producers in the world. Recent reports also indicated that Saudi Arabia and Russia are moving forward with a production freeze. Market observers will watch for the impact from a finalized accord in Doha, Qatar this weekend.
However, the International Energy Agency argues that the proposed deal is more about influencing market psychology than diminishing a global supply glut, the Financial Times reports.
“If there is to be a production freeze, rather than a cut, the impact on physical oil supplies will be limited,” the IEA said on Thursday, noting Saudi Arabia and Russia were already producing at or near record rates.[related_stories]