Russia Cuts Deal with Saudi Arabia to Freeze Oil Production

This is not our normal beat, but it has the ability to impact the Marcellus/Utica region. Yesterday Russia cut a deal with Saudi Arabia and several other OPEC members to freeze production at January levels for the foreseeable future. You might immediately think, “Aha, freeze production and oil prices will go up!” But the commodities market had the opposite reaction. Oil traders were hoping that the meeting, which is historic (Russia colluding with OPEC) would result in a CUT in production, not a FREEZE. The world is awash in too much oil right now–companies and countries are pumping more oil than the world can consume, leading to an oversupply and prices continuing to crash. The markets had hoped for a cut, got a freeze at the existing over-production levels–and that led to the price of oil going even lower. The price of oil influences the price of natural gas–and of course many companies that drill for gas also drill for oil, and the price of oil affects their economic health. So, for a variety of reasons, we like to keep an eye on the larger macroeconomic trends that may affect us here in the northeast. This is an important story…

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