Oil prices rallied by more than 50 percent ahead of expectation of oil deal between OPEC and some of the Non-OPEC nations. Unfortunately, due to absence of any deal, crude prices fell 5 percent today as the fight to capture and maintain the market share still goes on.
During the meeting, Saudi Arabia remained firm saying any output freeze or cuts would come only if all the OPEC nations agreed to it including Iran. Iran, on the other side, said the country would keep producing until the production reaches pre-sanction levels and not join any oil output freeze program.
As of now again the selling pressure gets an upper hand as the major producers are currently producing at near record high levels. For eg: Saudi Arabia, Russia, Iran, Iraq etc. Therefore the failure of any deal and in addition to higher supply keeps the crude oil prices under check.
The only hope of any of any sustainable price rally is either demand rising due to low price or the slowing of US oil production by more than 1 million barrels. US shale oil production is getting hit due to the lower prices as the prices are very close to their current cost of production of $25 per barrel.
We believe the rebalancing in crude oil has started. Most of the oil producing countries have been producing oil at record levels and all the big producers except Iran are willing to freeze/cut their oil production. The reverse in oil has just about to begun!!