Crude Oil making new highs @ 2016

Even as analysts these days have been crediting low crude oil prices to India’s current comfortable CAD position , crude oil prices are slowly but surely inching up and making new highs for 2016 at least. There has been steady recovery in crude oil prices and oil on Tuesday reached a 2016 high by touching $ 43 a barrel. Weak US dollar ,which has been at 8 month low against a basket of global currencies is touted to be one of the major reasons behind crude oil price increase along with stipulated increase in demand from China for crude oil. Adding to the price rise may also be the cut in production by several oil producing nations including those in the Latin America.

In an important development, the global stakeholders will be keenly watching the outcome of meeting to be held in Doha , Qatar on 17th of April where at least 15 major oil producers accounting for almost 75 percent of the world’s oil production will be strategising on the immediate future of oil Industry.It is expected that the members who will be attending the meeting may decide to take a production cut and bring some stability in the oil prices and thus minimise the credit risk in these oil producing economies including Russia. If the crude oil price remain at current levels it will increase the financial problems of the oil producing nation and will increase the credit risk of these oil producing nations.Oil had recently in the month of January touched $27 and since then has been gaining ground steadily. From $100 per barrel in mid 2014 the crude oil prices have slipped speedily to current levels. OPEC’s decision to not cut production even when there is excess supply situation in the global economy triggered the speedy price fall for crude oil.

A classic case may be emerging for crude oil prices where there is an increase in demand for the commodity and the supply is limited supported by a decision to cut oil production. There could be some speculative buying happening in the crude oil as well. Watch out for crude oil price as it may continue the recovery in prices as steady pace.