In the middle of this month, Russia and Saudi along with other oil exporters are going to work together aim to lift the price after Russia's Energy Minister Alexander Novak said Tuesday that a “critical mass” of oil-producing countries who take the 73% of the oil market have agreed to freeze oil production.
For this month, the oil future already went up almost 5%. Hedge fund and trader both illustrate a more optimistic negotiation from the conference. Since the last year, the oil price dropped a lot to lowest $26 per barrel due to an excess of oversupply. And Iran just double checked its attitude that it will only cut production after other oil exporters did. Besides this, the US drillers are also working together to make a better control of oil output in US. It seems that all the countries are working together to control the oil supply due to current situation. And also the market reacts to those positive signals with positive movements. The oil future back to the normal level before January.
On the contrary, everything about the promising future is still in the process and there is still no outcome of all those proposals. People who attends the game is more likely to be impact by their emotion and this effect is more popular in the future market. Supply and demand dominates the spot market while the expectations and emotion will be the keys to price the future.
For last year, oil companies still benefited from shell-oil technology even though the oil price crashed to a historical low price at that time. And now the situation just got worse for a below $30 price for oil. It’s necessary to freeze the output but how to do it and how to limit each party’s production are the problems.
“It is necessary to reach an agreement on a production freeze” to fix the oil market and there are no calls to hold an emergency OPEC meeting, the United Arab Emirates’ Energy Minister Suhail al-Mazrouei said, according to the country’s state news agency. “I believe that current prices will force everyone to freeze production...everyone should move toward freezing production whether they like it or not.”