Oil prices at the global market have recorded more than 40-percent jump in price in less than 12 months, jumping from a low of $36 a barrel in January to about $52 a barrel in recent months.
When oil was near $100 per barrel a few of years ago, U.S. production, aided by new technologies like hydraulic fracturing and horizontal drilling, drove a huge increase in the worldwide oil supply.
In recent years, the price of oil has continued to fluctuate leaving the Organisation of Petroleum Exporting Countries, OPEC to push for a cut in oil output.
In the latter part of November, OPEC members agreed to cut production. The reduction in production has caused the oil price to firm considerably, and we now sit at close to a 52-week high.
Meanwhile, market analysts are watching to see if the cartel agreement will be fully adhered to by all producing members.
Suffice it to say that the key to any OPEC deal is how many of the members will actually abide by the deal. However, some of the members might quietly sell more oil (provide more supply) than agreed upon in order to fatten their own coffers. Other members will flatly declare their intent to continue producing at previous levels.
