OPEC is preparing for oil prices to plummet, as demand shows no sign of improving, and space to store oil runs out, the Wall Street Journal reports.
In the past few weeks the price of oil has quietly ticked higher. Today, it hit $68.99 on the Nymex, the highest price it has seen since July 2. As has been the case for all year long, oil’s price rises while the dollar weakens, and the stock market rallies.
That’s all going to change, says OPEC. Stockpiles of diesel and heating oil in the U.S. are at the highest they’ve been since 1985. Demand for oil isn’t coming back, and these supplies are growing.
As the supply grows, the room to store it is running out. Almost every available location for storing oil is stuffed to the gills. At some point, there will be a snap and oil will either flood into the market, or traders will realise that demand isn’t strong enough to support the price. At that point, the price of oil is expected to fall.
To prevent this from happening, OPEC is already thinking about cutting its production to tighten global supplies.
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