China could derail OPECs effort to balance oil markets this year, says analyst

Although the oil markets have primarily been determined by OPEC nations in recent years, the plan to stabilize the global oil market has come into threat by China. Despite the oversupplied oil market causing a detriment to the global economy, China’s business processes can bring about detrimental outcomes for the worldwide oil market as it attempts to stabilize.

Key Takeaways:

• OPEC’s effort to balance an oversupplied oil market could have the unintended consequence of crimping crude demand from China, said Matt Smith, head of commodities research at shipment-tracking firm ClipperData.
• Falling demand from China, the world’s second largest oil consumer, would hurt OPEC’s current strategy.
• But cutting production has boosted prices, and that could result in less strategic buying from China, according to Smith.

“Oil prices are up about 20 percent since OPEC — followed by other producers — reached a deal to reduce output. They rose on Tuesday as traders awaited the Jan. 1 start of OPEC’s program to cut oil output.”

http://www.cnbc.com/2016/12/27/china-could-derail-opecs-effort-to-balance-oil-markets-says-analyst.html