Oil prices enjoy 9pc rise following OPEC move
Oil prices have seen a marked rise in the wake of a brave new move by the Organization of the Petroleum Exporting Countries (OPEC) to slash production.
Prices increased by almost nine per cent as a result of the OPEC decision, with Brent Oil and West Texas Crude Oil both rising over the course of this week – the former sat at 49.98 while Brent futures ended at 50.45.
According to OPEC ministers, the decision to slash production levels had been several months in the making. Indeed, Mohammed Bin Saleh Al-Sada, Qatar's minister of energy and industry and president of the OPEC Conference, said: "Over the past two months, this committee has done some excellent work. The meetings it has undertaken have been extremely constructive, providing us all with a better appreciation and understanding of the various viewpoints among OPEC and non-OPEC producers."
"The last time we met as a conference was in Algiers on September 28. This historic occasion, with OPEC Member Countries unified in approving the already mentioned ‘Algiers Accord’, saw an agreement on a new OPEC production target range. The focus was on accelerating the drawdown of the stock overhang and bringing the market rebalancing forward," he added.
Mr Bin Saleh Al-Sada also added that, in his opinion, slashing the oil production levels will enable a stabilisation to occur in oil prices across the globe. "It is vital that stock levels start to fall, as the decision taken in Algiers recognized. As we have seen in previous cycles, once this overhang starts falling on a regular basis then prices start to rise and more stability will return to the market," he went on to say.
There remained strong demand for oil across the world, with production 'remaining a growth business,' ministers confirmed. Oil demand levels in OPEC’s 2016 World Oil Outlook climbed to more than 109 million barrels a day by 2040, representing a marked rise of more than 16 million barrels a day.
However, in order to ensure this growth, major investments must be made in the "upstream, midstream and downstream," added Mr Bin Saleh Al-Sada. "Overall, estimated oil-related investment requirements are close to $10 trillion in the period to 2040," he confirmed.
US-based commodities investors have voiced their beliefs that the slowdown in the level of oil production across the globe could well prove positive for business in the US over the coming years. With oil exploration tipped to be allowed in locations close to the coast of Virginia and Florida under Donald Trump's new Presidency, boosted levels of oil production look increasingly likely. It is also expected that Arctic and Antarctic oil exploration, something which was not permitted by President Obama, may well also be given the green light by the incoming President and his advisors. Boosting the levels of US oil production has long been pushed by insiders including former Gov. Rick Perry (R-Texas), who has been suggested for Donald Trump's new Energy Secretary when he takes over the Presidency early next year.