A speculation over production cut have been able to hold oil price at steady price around $30 per barrel. However, uncertainty of its price stability still linger. In the meantime, U.S. crude inventories are reported to reach the record high for the first time.
Market Watch reported oil futures finished higher on Tuesday on hopes that members of OPEC and non-OPEC producers outside may reach an agreement to cut output to stem the persistent slump in oil prices.
Russian officials have made decision to initiate a dialogue with Saudi Arabia and OPEC to repress output in order to boost the price. Chief market analyst at CMC Markets, Michael Hewson commented on the initiative, "The fact that the bigger oil producers are talking in these terms is limiting the downside."
However, according to Reuters until this week, there were few signs that the biggest producers were ready to make such a move.
As the major oil producers maintain its production level, oil price is still in turbulence. The World Bank has also slashed its oil price forecast, due to cost of a barrel of crude will stay near its current lows for the rest of 2016 as reported by The Guardian.
The Washington-based financial institution reduced its forecast from $51 a barrel last October to $37. One of the reason is the warm winter weather in Europe and weaker than expected growth in China and other emerging economies will depress demand. Beside the oil glut will continue to dominate the market for the next year.
World Bank senior economists John Baffes said, "Low prices for oil and commodities are likely to be with us for some time. While we see some prospect for commodity prices to rise slightly over the next two years, significant downside risks remain."
On Thursday, oil is steady at $33 per barrel, just a little above its lowest record in 12 year earlier. Last week, the continuous oil glut drove the price down to $27.
The speculation over possibility of reduced output from major producers was able to lift the price. Brent crude was traded at $33.28, a little well but still have not recovered from its 11% drop within January.
Meanwhile the Energy Information Administration (EIA) announced on Wednesday that U.S. crude inventories climbed by 8.4 million barrels last week. The number is much higher than analyst expectations at 3.3 million barrels increase, and recorded as the highest level of U.S. oil inventories since EIA began tracking the data in 1970's.
Speculation over production cut may hold the oil price to around $30 a barrel. However that will not stay for long, as the production level is still maintained. Meanwhile, U.S inventories are reported to reach its highest level of crude stockpile.
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