Lead Capital Partners Says Oil Production Cut Is Pie In The Sky

2024-04-22 11:53:26 Industry

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Lead Capital Partners: OPEC unlikely to cut production with victory over shale producers seemingly at hand

Lead Capital Partners says hopes that a deal between OPEC and non-OPEC nations that would see coordinated cuts in crude oil production are probably based on little else but conjecture according to analysts at New York-based investment house, Lead Capital Partners.

Comments made by the United Arab Emirates? oil minister suggested that OPEC members were ?ready to reduce output? and sparked a sharp rally in prices during a feverish trading session. Having fallen to a 12 year low of $26.05 last Thursday, crude settled up 12% on Friday with many attributing the rise to hope that a deal was on the table.

?We?re highly skeptical,? said Fernando De Renta, who leads commodities strategy at Lead Capital Partners. ?Venezuela and Russia have been trying to get the Saudis to cut production this week but to no avail. We don?t see Riyadh agreeing to a cut when they believe they are so close to breaking the US shale producers,? he remarked.

OPEC has refused to cut production in order to drive price higher because it is defending its share of the oil market, currently at 40%. Instead, it wants the US shale producers to cut production and is prepared for prices to dip as low as possible in order to achieve its aim.

?There is a school of thought which believes that the strength of the US dollar has played a significant role in the price of oil, more so than a million or so extra barrels on the market,? said De Renta.

Lead Capital Partners says it believes oil prices will recover markedly in 2016 partly because of shale oil production cuts but also because of a weakening in the US dollar.

About Lead Capital Partners:
Lead Capital Partners is an independent investment management practice founded on the philosophy that an active, opportunistic and adaptable approach to investing provides our clients with the best chance for the realization of long-term positive returns irrespective of prevailing market environments.
It is our firm belief that the ?buy and hold? investment strategy that has traditionally served investors to such great effect over the decades can, now, lead to significant losses in bear markets, or to little or no profit in markets that persist in trading in ranges unless they are actively managed by seasoned professionals such as those at Lead Capital Partners.