Oil Prices Show Signs of Revival; Hit 2016 High!
After a wavering start early in the morning, Oil Prices witnessed a four-month high of the year 2016 today on Tuesday. The fresh prices for U.S. Crude oil now stand at $40.80 per barrel after rally of 1.1%.
This unexpected increase is largely based on the hopes of the upcoming meeting of oil producers to freeze production while agreeing on common lines. The other factors included a weaker U.S. Dollar and strong import demands in the Chinese market.
The Productions Freeze- Where it Stands Today!
Majority of the members of OPEC and other members from outside, who are large Oil producers are headed for a meeting with other nations including Doha and Qatar. This meeting is scheduled for Sunday so as to discuss on freezing output to attain stability in unstable Oil prices.
As far as expert call in this regard is concerned, it can be affirmed that Oil producers agreeing on production caps on Sunday is a huge factor. This fourth consecutive hike in Oil prices only goes on to stress that there remains the need for considerable amount of improvement in the market scenario and what if, the results of Sunday's meeting were negative?
There are others who think the Oil prices hike is similar to the one in February where the plan of meeting of market giants was made. It had back then lead to a buying fling, however, it all came down falling when Saudi Arabia withdrew showing unwillingness in being part of the meeting. Tehran is another country not supporting the concept of production freeze ever since. So, any conclusions as of now would be too early a statement.
Other Key Factors in Oil Price Rise
The other significant reason is slump in USD, as the prices are already above $40. This in turn has lead to speculative buying decisions such as in China where there has been an ever increasing rise in the sales of vehicles. This rise has caused increased gasoline demands.
While some analysts believe that the market is well ahead of its time as far as price rise is concerned; the others fear a disagreement in Sunday’s meeting. The rest of the trends are unpredictable as of now and we as analysts could only make predictions based on these trends. Let’s wait to see what’s in store next!