Commodity Daily News

OPEC Announces Future Production Cuts

As global demand for Crude Oil slumps even further, actions are being discussed to cut production as a counterweight to falling prices. OPEC has agreed to decrease output, but there is still no agreement as to how much of a cut will be implemented. The upcoming production cuts will range between 1 and 2 million barrels a day, roughly 6% of total production, according to OPEC President Chakib Khelil.


The announcement of these cuts was enough to calm the price of Oil for the time being as it appears to have leveled off in today's early trading sessions. A further depreciation may be expected in the short-term, however, as the effects of this production cut are purely psychological at this point. Until they actually take place, the price will continue to reflect investor expectations, and the value of Crude Oil compared to its currency counterpart: the U.S. Dollar. When the major currencies find their direction and take off, the price of Crude Oil will do the same. Traders should look to the USD as it has historically been a strong indicator for the direction of the price of Crude Oil.