Although some oil forecasts are increasingly optimistic, implying significant upside from current levels, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, is off more than 4% over the past week.
That decline does not mean oil and USO are headed for another bear market, but it could be a sign that crude futures are set to plateau over the near-term. Looking ahead, the Organization of Petroleum Exporting Countries will consider agreeing on output cuts for most members when the group’s energy ministers meet on November 30.
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OPEC plans to diminish output to a range of 32.5 to 33.0 million barrels per day from its current estimated output of 33.24 million barrels per day. While Saudi Arabia, OPEC’s biggest producer, has agreed to reduce output, Iran, Libya and Nigeria might not follow suit.
Obviously, production is a key element in the decision-making process regarding energy investments.
Currently, oil investors face conflicting reports regarding output. For example, Venezuela’s crude output is plunging to multi-year lows while Algeria is looking to boost production.