Commodity Daily News

Oil Prices Weaken; Will OPEC Cut Production Further?

Crude Oil prices continue to remain steady on Tuesday, hovering just above $40 a barrel. Crude Oil prices stabilized after previously dropping almost 10% on increased signs the deepening global recession will limit fuel demand. However, Crude Oil is likely to continue declining if the USD will strengthen further against its currencies of six major U.S. trading partners, thus reducing the appeal of commodities as an alternative investment. Market players await the U.S. inventory data being released on Tuesday, as the figures are likely to show the impact on demand from the world's top energy consumer.

Crude Oil prices, which fell to a 5-year low of $33.87 a barrel on Dec. 19th, have rebounded recently as the Organization of Petroleum Exporting Countries (OPEC) restricted production further. Although OPEC officials gave conflicting signals on their intentions to further cut output in order to bolster prices when they meet in Vienna on March 15th, it created certain expectations in the mind of market participants. Investor sentiment is expecting OPEC to make another cut, but if the cartel decides not to lower crude production when it meets, analysts anticipate that Oil prices have much further to fall, perhaps below $30 a barrel.