A two-day rally in commodity and oil prices has seemed to awaken the bulls which have been in hibernation since crude oil prices started tracking lower on April 12.
Looking ahead to OPEC meetings at the end of May, some of the world’s largest producers such as Saudi Arabia, Russia, and Kuwait have already announced their support for maintaining production cuts until March of next year.
The problem for OPEC and non-OPEC allies that have agreed to cuts in an effort to rebalance the global market, has been a reviving U.S. energy sector and record inventory levels stateside, which are keeping a ceiling on prices.
The Paris-based International Energy Agency suggests that even if OPEC members curtail production for the next year it may not be enough given supply levels.
Factor in increased production forecasts — be it out of the US, Nigeria, or Libya — and we’re back to square one.