The oil price has finally found some buyers today after falling for the past 10 trading sessions which marks its longest consecutive daily decline in more than 30 years and has now forced some OPEC members to reconsider their strategy regarding production cuts.
A committee of several OPEC members as well as other countries who export oil have predicted at current output, the oil market will reach an oversupplied state in 2019 and the only way to fix it is for some countries to cut production
"The Committee reviewed current oil supply and demand fundamentals and noted that 2019 prospects point to higher supply growth than global requirements, taking into account current uncertainties," they said
"The dampening of global economic growth prospects, in addition to associated uncertainties, could have repercussions for global oil demand in 2019 and could lead to widening the gap between supply and demand." They added.
After reaching a high of $77 in October, the oil price has now fallen more than 20 percent which technically puts the commodity in a bear market and some analysts predict that if we reach the next support level which was formed at the beginning of the year the price may go into free fall.
"Obviously when you get a 20 percent decline, you definitely get some technical damage. Not only have we broken below the 200-day moving average that a lot of people have talked about but, much more importantly, we've broken below the trend line going back to the early 2016 lows so that's a problem," said Matt Maley, equity strategist at Miller Tabak.
"What's the next support level? That doesn't come in until you get down to the $57.50 level. That was the February lows. You break below that, we've got real problems," he added.