by Ryan Vlastelica
Investors had held out hope that production cuts will be announced at the meeting of the Organization of the Petroleum Exporting Countries, moves that could help stabilize oil prices and address a glut of oil that has resulted in crude prices tumbling from their 2014 peak. However, Wall Street has lately expressed its doubts.
“Understanding what OPEC will do is like herding cats, which is difficult even if you know how the cats behave, which isn’t something you can say here,” said John Kosar, chief market strategist at Asbury Research in Chicago.
The summit has been marked by confusion, with Russia not showing up and failed meetings ahead of the formal OPEC convention. That uncertainty has contributed to market gyrations.
Crude-oil futures sank 4.2% to $45.13 a barrel on Tuesday. While it remains up more than 27% for the year, that follows two years of sharp losses: oil fell nearly 46% in 2014, and another 30.5% over 2015, hurt by both low global demand and unchecked crude production.
“There’s no trend in oil prices right now, which shows the lack of conviction about what OPEC is doing,” Kosar said. “We’d need a strong catalyst to lift oil for more than a few days.” He added that there were three levels that could serve as support for crude oil prices: $44 a barrel, $42.70, and $41.40. Those levels indicate a downside range of 2.5% to 8.3% from current levels.
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