Crude oil for April delivery has moved up by US$1.50 to US$41.65/barrel, on news that OPEC plans to devise a “solution” to boost oil prices when it meets on March 15.
Oil prices plunged by 10% yesterday, to US$40.15 a barrel, the biggest one-day drop since Jan. 7, after global equity markets slumped on reports of manufacturing declines in China and USA. It is estimated that OPEC could cut back production by an additional 500,000 - 1 million bpd at its next meeting. Last month OPEC’s production averaged to 27.775 million bpd, down by 770,000 bpd since January.
However, as the global economic crisis worsens amid rising unemployment and an increasing number of companies and banks going out of business, demand will continue to deteriorate because this scenario will lead to lower consumption of gasoline and less usage of energy.