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    Home » 2016 » March » 31 » Production freeze is a tactic to influence the price of crude oil temporarily
    0:49 AM
    Production freeze is a tactic to influence the price of crude oil temporarily
    The freeze on production in the Doha agreement February 16 is a tactic to influence crude Alinvtalnaft prices temporarily without changing the fundamentals of the market and the givens that began interact very effectively before the announcement of the freeze towards price stability and neutralize the producers who are unable to continue in the medium term to higher costs over the settlement points.
    Thus jumped West Texas rate of 6% and Brent oil 7% on 17 February and was very limited effect, where prices have stabilized in the next day and then declined and continued in a volatile state, and when it was announced in the March 7 for the next meeting on April 17, jumped prices again 6% and 4% of West Texas and Brent respectively, and then jumped again when he said some OPEC countries wish to join the freeze production.
    There is no doubt that oil prices high sensitivity of the resolutions Saudi Arabia and some producing countries, the future direction of prices, but the determinants of oil markets are still exercising pressure on prices now and the future, and we have to learn from the sharp declines in oil prices over the past three decades, even infer what is going on in the current period how long before the rise of prices to the best levels, but not at the levels that dropped them in the past.
    In the eighties with the beginning of the Iranian revolution and the war with Iraq, prices rose to more than $ 35 and then dropped to less than $ 10 in 1986 and did not bounce, but four years later in September 1990.
    In the nineties with weak global demand for oil prices from $ 22 landed in February 1997 to $ 11 in November 1998 and did not regain their forces to August 1999, and then continued on this course over the past decade with the global economic downturn, and in April 2008 with the onset of the financial crisis global prices have jumped sharply to $ 145, which did not last long even fell sharply to less than $ 40 in February 2009, and then continued at these low levels.
    In a period of increased supply at the beginning of 2011, the price has tumbled from its highest level at 123 and $ 125 in April 2011 and May 2012 m, respectively, to $ 30 in February 2016.
    The important question is, when will prices go back, this time to an average price of $ 70? I think also some oil experts believe it will take a longer period and for the next several years under the current and projected market data hypothesis, it inflated the supply of more than 1.9 million barrels per day with the progress of drilling and production techniques that have made the contrast between them and previous periods and a broad period, and thus become the quota strategy market moving and not frozen successful strategy to reach the goals of price stability and global markets.
    And the OPEC countries at its next meeting to take into account at least change the freezer with the increased demand so prices do not rise to the high levels of expectation in the trap prices again, and not to keep the freeze on production in the case of high demand or high total global production because it is considered a reduction to produce a great product , which gives us a prescription product likely role again.
    There is a difference between Russia, which is currently producing at full capacity with 10.86 million barrels per day, and between Saudi Arabia, which produced 10.23 million barrels a day and has a production capacity of more than 2 million barrels per day over the medium term.
    If it is necessary to freeze production let him complete the construction on the moving average price for 50 days so you can measure the rates of the Saudi move and if it changed its stake or not, resulting in the best price us close to the point of balance between supply and demand.
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