Changing Trends?: on The Global Petroleum Market:The Hindu Editorial
A meeting of OPEC and its allies in December will decide the future course of oil prices
The fickle nature of the global petroleum market has been on display over the last few days as prices reacted to statements and counter-statements by producers and consumers. Over the weekend, Saudi Arabia signalled its discomfort with the falling prices and hinted at a fresh cut of one million barrels a day. The benchmark Brent crude, which slipped below the $70 a barrel mark last Friday, reacted sharply on Monday, rising to above $72. That prompted a tweet from U.S. President Donald Trump asking for lower prices, and so, on Tuesday prices again fell to below $69! The price of Brent crude, which had risen over the $85 mark in early October, is down by about 20% from its October peak. Interestingly, Saudi Arabia’s latest call to cut output comes just months after the OPEC cartel decided to increase its output. In their June meeting, OPEC members decided to ramp up supply after apprehensions over Iranian supplies in the wake of economic sanctions imposed by the U.S. Since then, the U.S. has granted a temporary waiver to eight countries, including major buyers India and China, to continue importing oil from Iran for at least the next six months. The way prices have responded to OPEC’s output decision, however, suggests that it may still be too early to dream about higher prices in the near future. A crucial meeting between the cartel and its allies in the first week of December will decide the 2019 output level. That might well set the trend for oil prices in the new year.
Even after OPEC’s sudden change in its supply outlook, oil surprisingly continued its longest losing streak on record, perhaps owing to expectations that the production cut would not raise prices significantly. In fact, technically speaking the oil market is yet to break its short-term downtrend that began after the fall from its peak in October. Oil prices were down on Tuesday as well. This price action suggests that markets could probably still be worried about the risks of any kind of sustained rise in oil prices. For one, strong U.S. opposition to higher oil prices could be making investors feel jittery. Mr. Trump’s tweet on Monday, for instance, negated the bullish influence of OPEC’s announcement almost immediately. The increasing output of shale is another significant threat to oil prices.The U.S. Energy Information Administration last week predicted that American crude output would increase at a higher pace than expected and lead to lower prices next year. This is not at all surprising because U.S. shale producers have traditionally increased their output in response to higher oil prices. Also, producers like Russia have been non-committal on any significant production cut. Any slowdown in global economic growth is another risk factor that may weigh down oil.
IMPORTANT WORDS & MEANINGS FROM ARTICLE
1. Word: Fickle (अस्थिर)- Pronunciation: fik-uhl/फिकल
- Part of Speech: Adjective
- Meaning: changing frequently, especially as regards one's loyalties or affections.
- Synonyms: capricious, changeable, variable, volatile
- Antonyms: stable, constant, steady
- Use in a Sentence: The group has been notoriously fickle in the past.
- Pronunciation: boo l-ish/बुलिश
- Part of Speech: Adjective
- Meaning:
a. aggressively confident and self-assertive.
b. characterized by rising share prices. - Synonyms: optimistic, hopeful, buoyant
- Antonyms: pessimistic, gloomy, dreadful
- Use in a Sentence: He is very bullish about the prospects of his business.
- Pronunciation: wey doun/वे डाउन
- Part of Speech: Verb
- Meaning:
a. to cause to bend down: overburden.
b. oppress, depress. - Synonyms: overload, trouble, impede
- Antonyms: lighten, relieve, cheer
- Use in a Sentence: Any buildup in bad loans could weigh down growth and public finances.
- Pronunciation: bench-mahrk/ बेंचमार्क
- Part of Speech: Noun
- Meaning:
a. a standard of excellence, achievement, etc.
b. any standard or reference by which others can be measured or compared - Synonyms: standard, measure, yardstick
- Antonyms: estimate, guess
- Use in a Sentence: The truck industry is a benchmark for the economy.
- Pronunciation: non-kuh-mital/नॉन कमिटल
- Part of Speech: Noun
- Meaning: not expressing a clear opinion or decision
- Synonyms: reserved, careful, prudent
- Antonyms: revealing, careless, indiscreet
- Use in a Sentence: The judge was non-committal about the case when questioned by reporters.
- Pronunciation: ram p- up/ रैंप उप
- Part of Speech: Verb
- Meaning: a. to make something increase in amount
b. strengthen - Synonyms: build up, develop, progress, escalate
- Antonyms: corrode, reduce, decrease
- Use in a Sentence: The company announced plans to ramp up production to 10 000 units per month.
- Pronunciation: ni-geyt/ निगेट
- Part of Speech: Verb
- Meaning: make ineffective; nullify.
- Synonyms: deny, contradict
- Antonyms: affirm, approve
- Use in a Sentence: Our actions often negate our principles.
- Pronunciation: ap-ri-hen-shuh n/ ऐप्रिहेन्शन
- Part of Speech: Noun
- Meaning: anxiety or fear that something bad or unpleasant will happen.
- Synonyms: dreads, misgivings
- Antonyms: confidences, calms
- Use in a Sentence: The change in the law has caused apprehension among many people.
- Pronunciation: prom t/ प्राम्प्ट
- Part of Speech: Adjective, Verb, Adverb
- Meaning:
b. (of an event or fact) cause or bring about (an action or feeling). [Verb]
c. exactly (with reference to a specified time). [Adverb]
- Synonyms: impel, persuade
- Antonyms: tardy, sluggish
- Use in a Sentence: We would be grateful for prompt payment of your account.
Some GK Questions from Article
Q1. Where is the headquarters of OPEC?Q2. Name the President of US.
