OPEC cut rumor halts oil price decline
Oil prices briefly dipped to new 12-year lows Thursday, but
a fresh hope of potential production cuts helped the
commodity regain some of those losses later in the day.
West Texas Intermediate, the U.S. benchmark crude oil,
fell 4.5% to $26.21 on Thursday but rebounded above
$27 after the Wall Street Journal paraphased a United
Arab Emirates Energy Minister as saying that "OPEC
members are ready to cooperate on a cut."
The commodity hasn't settled below $26 since May
2003, according to the Oil Price Information Service.
Production cuts at the Organization of the Petroleum
Exporting Countries would help ease the global glut of
crude oil that has crushed the commodity in recent
months and tipped U.S. gasoline prices into a downward
spiral.
But rumors of OPEC cuts are not the real thing. Two
weeks ago, oil surged briefly after the Russian news
agency TASS reported that OPEC and Russia could meet
in February to cut production.
That hasn't happened yet.
In fact, OPEC increased production in January by
280,000 barrels per day to 32.6 million, according to
an International Energy Agency report released Tuesday.
"A sanctions-free Iran, Saudi Arabia and Iraq all turned
up the taps," IEA reported.
Still, any sign that OPEC members are weighing cuts will
be welcome news for U.S. energy producers that are
swimming in debt. Analysts expect numerous bankruptcies
by U.S. oil companies in 2016.
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