“On September 20, OPEC Secretary-General Mohammed Barkindo was talking publicly about a one-year production freeze among OPEC members and Russia. Two days later it was reported the Saudis would cut output if Iran followed. We’ll see. In August, OPEC believed non-OPEC production would fall by 1 million b/d this year from 2015 and a bit more in 2017. Even the most pessimistic estimates for demand growth see 1.2 million b/d this year and next. But there is no consensus on these numbers,” reports OilPrice.com.
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Oil is also likely to get some help from now dwindling bets that the Federal Reserve will raise interest rates in the coming months. Raising interest rates would likely boost the dollar, in turn pressuring dollar-denominated commodities such as oil.
“At some point global supply/demand curves will cross enough to cause prices to rise. Some data indicates they already have. With low oil prices causing massive cutbacks in spending on new supplies, everyone agrees oil prices are very unlikely to revisit recent record lows and will rise over time,” adds OilPrice.com.
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