OPEC Meeting Can't Reverse Larger Trend to Lower Oil Prices - Bloomberg

OPEC Meeting Can't Reverse Larger Trend to Lower Oil Prices - Bloomberg:

Some of us are starting to associate turkey with low oil prices.

Just four years ago, on Thanksgiving Day in 2014, OPEC held a meeting in Vienna, the outcome of which set off a dramatic slide in oil prices. The price of Brent crude dropped $6 a barrel, or 8 percent, in just the 24 hours after OPEC announced the outcome of its meeting. This Thanksgiving, there was no OPEC gathering, but on Friday, the Brent price still slid nearly $4, or 6 percent, to its lowest mark in a year. Although the price has since stabilized, we cannot rule out a further slip in the weeks or months ahead.

The recent decrease in oil prices is what academics like to call “over-determined.” Despite recent jitters about a looming spike in the price of oil, both supply and demand have conspired to bring down prices. New production has come on line in recent months, be it from Clair Ridge (BP’s new mega-oil field in the North Sea), record amounts of shale oil coming out of the U.S., or simply production increases by Saudi Arabia, Iraq and Russia. Other developments — like the hope to resolve infrastructure bottlenecks in the U.S. and a new agreement between Baghdad and the Kurds to allow the restart of exports from Kirkuk’s contested oil fields — promise even more oil in the months ahead. Unexpected sanctions waivers issued by the Trump administration mean Iranian oil will not be squeezed out of global markets just yet. Meanwhile, the robust growth in oil demand of the past years appears to be easing, especially with trade frictions looking persistent.