Why didn't the OPEC cuts shore up oil prices?
Answers
989 points
rvilmur answered one year ago …
Nobody really trusts OPEC members to honor their quotas as they have generally cheated in the past. The second reason is that supply and demand is currently not working because of forced sales due to panic and margin calls. Lastly, supplies in storage are rising in most countries as the cure for high prices was high prices causing a temporary reduction in usage.
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474 points
spider348 answered one year ago …
I think it normally would have but the extreme panic in the market environment is dictating everything at the moment. Like bears running through Pamplona.
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951 points
Grudun answered one year ago …
The other reason it had little effect on prices is that at least a 1 million barrel per day cut was already priced in. If you look at the news coverage everything said it was a meeting where OPEC was expected to cut production by at least 1 million barrels per day.
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678 points
BoxCar answered one year ago …
FUEL is not the only product derived from a barrel of OIL, PLASTICS account for a large part of OIL CONSUMPTION, so if retail sales are off in everything from AUTOS
to APPLIANCES, there is a lessening in demand for the commodity we call OIL
2082 points
alanj answered one year ago …
A cut in supply takes time to have an effect between the supply and demand ratio.
And oil is traded in US dollars. When the dollar goes up like it is now the value of oil goes down.
3943 points
MNSL answered one year ago …
I do not think OPEC cut or reports written by top investment bank analysts can dictate the oil price again.
Fundamentals are weak for oil now.
Even momentum investors and technical investors do not like to touch oil now.
There will be lot of surprises in energy sector in the next 05 years. Only cost effective energy sources will survive in the next decade.
