Crude oil prices got back during Monday’s early Asia trade, after a recent Friday’s surge on speculations that main oil producers were very close to a collective production cut.
Light sweet crude oil futures for March delivery decreased to $29.36 on the New York Mercantile Exchange. Additionally, on London’s ICE Futures exchange, April Brent crude oil dipped to $33.32 per barrel.
Oil prices demonstrated their greatest one-day bounce since the financial meltdown by the end of the last week when the energy minister of the United Arab Emirates informed that the members of OPEC were about to cooperate, but only on the condition that non-OPEC market participants also do the same.
Oversupply has appeared to be the most essential culprit in keeping crude oil prices low for the last two years. Meanwhile, some prominent such crude oil suppliers, such as Iran, Saudi Arabia and Russia seemed to have no desire to cut their production, being afraid that American shale producers would hurry to expand their market share.
In order to prevent that, OPEC had to keep production high enough with the only purpose to drive away competitors, which could have been attracted by low prices.
As for Iran and Saudi Arabia, they don’t seem to be actually interested in an immediate production. These producers simply don’t want prices to dip too low. It’s because the price $25 a barrel can’t be profitable for them.