Oil skyrocketed after OPEC announced increase in production

Short comment

Crude Oil skyrocketed closing to $70, rising more than 5% right after OPEC announced production increase.

Targeted amount of increase is 100m barrel a day, which is reflecting pressure from president Trump very well.

But, experts believe that couldn't be possible because production capacities couldn't reach to that level.

They expect maximum level is 60m barrel a day.

Besides, some predict that there would be additional geopolitical problems brought in from Iran and Saudi.

Like we all know, Iran is opposing to the increase because it's from will of US government which is going through severe conflict with the country.

But Russia and Saudi ignore Iran's opinion, and take the measure.

Some financial market players, who deal future and synthetic securities, think that Iran's position could bring further geopolitical issue, and lead to additional skyrocketing like it did in May.

They are insisting that there are no surprises if price of Oil reach to $120 again.

On the other hand, real dealers in crude refiners, think the market in exactly reversed way.

They said there aren't enough demands in real economies, mostly because of slowing Chinese economy.

Possible economic backdrops, from developing countries like Turkey, Argentina or South-Africa, and slower-than-expected European economic expansion supported their testimony.

which will be turned out to true?

I believe the latter is more close to true, considering situation of May, when hedge funds were gathering to Oil market but the price didn't overcome wall of $73.

Another factor is abundant supply in North America, where real oil price of Canada is being too low compared with that of US and the situation is bringing Mr. Trudeau's business expansion of oil pipe in.