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Crude Oil Crashes Ahead of OPEC+ Meeting

Summary:
Futures for crude oil crashed today, falling more than 1%, ahead of the OPEC+ meeting tomorrow. The Organization of Petroleum Exporting Countries, Russia, and several other oil-producing countries will meet tomorrow but several key ministers were talking today. They were discussing oil production cuts that were introduced previously to buoy oil prices. Specifically, they were discussing should be the cuts extended and for how long. Members of the output reduction agreement were planning to start rolling back the cuts but the second wave of the COVID-19 pandemic made such plans questionable. The pandemic leads to lockdowns, which result in a substantial drop in oil consumption, which in turn can lead to a crash of prices for crude. Now, the OPEC+ members should decide whether they will

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Futures for crude oil crashed today, falling more than 1%, ahead of the OPEC+ meeting tomorrow. The Organization of Petroleum Exporting Countries, Russia, and several other oil-producing countries will meet tomorrow but several key ministers were talking today. They were discussing oil production cuts that were introduced previously to buoy oil prices. Specifically, they were discussing should be the cuts extended and for how long.

Members of the output reduction agreement were planning to start rolling back the cuts but the second wave of the COVID-19 pandemic made such plans questionable. The pandemic leads to lockdowns, which result in a substantial drop in oil consumption, which in turn can lead to a crash of prices for crude. Now, the OPEC+ members should decide whether they will postpone pairing back the cuts. Algerian Energy Minister Abdelmadjid Attar said that there is a consensus among the OPEC members to keep the current 7.7 million barrels per day cuts till the end of March. But there are members of the OPEC+ deal, including Russia, who would prefer to start a gradual increase of production in January. The uncertainty surrounding the OPEC+ decision was likely the factor that has hurt oil prices.

Futures for delivery of WTI crude oil in January dropped by $0.58 (1.27%) to $44.95 per barrel as of 17:24 GMT on NYMEX today. Brent crude tumbled by $0.67 (1.39%) to $47.51 per barrel on ICE.

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Vladimir Vyun
Vladimir is an online journalist with background in computer science and work experience in pension funds. He contributes news reports, fundamental analysis and sentiment forecasts to TopForexNews.com and CommodityBlog.com. His main specialization is the currencies of emerging economies and inter-market correlations with commodity and bond trading.

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