After a deep decline, Oil prices experienced a relief rally to cover up recent losses but still way to go !
When OPEC and Non OPEC producers agreed to cut productions earlier in November 2016, Oil markets believed this agreement will led prices to new highs and bridle supply side and ending supply glut but later when U.S Shale producers take action to increase drilling rate, markets failed to balance supply and demand and prices fall deep again from 54$ per barrel for Crude Oil to 42$ per barrel today.
Also, Libya started to pump at the highest level in recent years so that Oil-Stored levels jumped to new highs in 2017!
Current situation makes it hard to predict where declining in prices will end up but if oil prices fall below 40$, U.S shale producers drilling activities will be under heavier pressure and will not have reasonable profit margin. it means drilling cut and U.S inventories will fall faster in the following quarters 2017.
besides, Saudi Arabia is targeting a 60$ per barrel Oil Price, said WSJ, which means the oil-rich kingdom may take more supply cut than the others to re-balance supply and demand and it may help demand side!
