Oil futures skyrocketed Wednesday morning amid speculation that the Organization of Petroleum Export Countries (OPEC) would reach an agreement to cut oil production by the afternoon.
OPEC began flooding the global marketplace with oil in 2014 in an attempt to depress prices and counter new competition. The group of oil-producing countries pumped out 31.3 million barrels per day as of May, 2015, the highest level of oil production since August, 2012. As a result of the deluge, the price of oil per barrel fell from $107.5 in June, 2014, to $45 in January, 2015.
Futures contracts are legally binding agreements to buy or sell a commodity at a predetermined price at a specified time in the future. Crude oil futures begin ticking up just before 2 a.m. this morning. At that time, the price of crude oil was $45.56. By 8:15 Wednesday morning, crude oil futures soared to $48.39.
The surge in oil futures comes after a long-anticipated move by OPEC to cut oil production end Wednesday afternoon, investors believe. Many expected OPEC to reach an agreement Monday, after Iranian oil minister Bijan Zanganeh hinted that the conglomerate would likely agree to cut production in the near future.
Many predict the terms to be a cut in production of one million barrels a day, around one percent of the global oil supply.
If an agreement is reached, some predict oil futures could go as high as $55 a barrel or the worst case of $40 a barrel if countries fail to reach consensus.
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