There has been an ongoing energy crisis in the energy field from the very beginning of the year 2016 as oversupply problem of oil pushed the price of oil lower in the global economy. Most of the leading oil investors were worried since the price of oil kept falling in the global market breaking critical support level. However, during the last part of the year 2016, OPEC came up with a solution to cut the production rate of oil to bring stability in the financials market. Such a drastic action from OPEC has not been seen since 2008.After the production cap in the oil industry trading commodity became a little bit easier and most of the expert investors made a decent profit by riding the long rally of oil price.
Decent jump from one month low: In the last few weeks the price of oil dipped into the global market as the stock of U.S crude rose to a significant amount. However, the price of oil found some solid buying pressure in the global market after OPEC declared the extension of production cap in the global market. There has been a decent gain for near about 33 cents in the Brent Crude and it traded at $51.77 a barrel in the global market. On the other hand, the price of light crude went up by 44 cents and traded at $49.41 in the energy field. Most of the leading investors are now overly cautious since the price of oil has jumped off from critical support level in the global economy and fresh buying pressure will trigger another medium term bullish rally in the price of oil. However, if the current level fails to provide enough buying pressure to the oil bulls then we will see a sharp fall in the price of oil in near future.
Sentiment of leading oil producers: Most of the leading oil producing countries in the global economy have appreciated OPEC decision to bring stability in the energy field and this has also made Trading commodity much easier. Some of the leading oil producing countries like Saudi Arabia and Kuwait has already cut their current production rate of oil more than they promised. However, Iraq is still fueling up the oversupply problem in the oil industry and most importantly they have said that they are not going to limit their current production rate of oil since their economy is greatly dependent upon the oil market. On the other had the rising number of active oil rigs in the U.S economy has also created sensational fear into the mind of leading oil investors in the global market. In the year 2016 the number of active oil rigs in the U.S economy was only 12 but over the period of 12 months, it has exceeded 657 in numbers. An active production from such a huge number of oil rigs will drastically push the price oil lower and trading commodity will be extremely difficult at that time.
Summary: The ongoing energy crisis in the energy field has been minimized to a great extent due to the strong effort by OPEC leading leaders. Most of the leading economist in the global market is now thinking that the price of oil will rally higher in near future and the decent recent extension of the oil cap production greatly favors the statement of the leading economist. Though the active number of oil rigs in the U.S economy is a burning issue but the U.S government has stated that they are going to limit their current production of oil and will ensure that they are not fueling up the oversupply problem in the global market. The recent bullish jump in the oil price from the critical support level also suggest that the bears are not yet ready to push the price further down.