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For the first time in nearly seven months, the price of crude oil will end the week with a closing price below $60 per barrel. After rising back above $60 per barrel on news that OPEC had decided to reduce oil output by nearly 1 million barrels per day, oil fell $.33 today to close at $59.70.
Since hitting its all-time high of $78.40 per barrel on July 14, the price of oil has fallen nearly 25% thanks to continued reports of increasing worldwide inventory levels. It was widely believed that OPEC would begin to consider oil production cuts once the price of crude oil was able to hold below $60 per barrel.
While it seems that most OPEC members will not immediately begin trimming oil production by 1 million barrels per day, that hasn’t stopped Venezuela and Nigeria (both OPEC members) from announcing they will begin production cuts of their own, at 50,000 barrels per day (Venezuela) and 5% (Nigeria).
Many analyst are now predicting OPEC will implement its drastic scale back once the price of oil reaches $55 per barrel.
Regardless of the immediate actions OPEC takes, it appears that for the time being, we are nearing the end of oil’s (as well as gasoline’s) dramatic decrease in price.