The barrel of Brent, used as the European benchmark, fell Monday to the $ 40.7, to its lowest level in nearly seven years. Oil responds thus to differences in the OPEC schedule, evidenced in the meeting last Friday in Vienna, on the need to reduce the level of supply of its 12 Member States in 2016. Oil exporting countries extend their particular Way of the Cross and importers continue to benefit from tailwinds. A barrel of Brent dropped around 5.3% on the day and already the third of its value so far this year, pushed down by excess supply left due to a change in the trend. Is had not been traded below $41 since February 2009, during the last Recession
OPEC oil production marks its three-year high records. On Friday, the biannual meeting of the major exporting countries ended without agreement to cut oil supply and try to rebalance the price, a strategy used several times in the past but now does not end curdling by the reluctance of Saudi Arabia.
The poster is divided into two parts: first Venezuela, Ecuador and several African countries advocate for reducing pumping up prices; the other, the oil monarchies refuse to loosen production. For now the thesis of the second, led by Saudi Arabia, who prefer to sacrifice margins to lose market share in a real pulse of the oil fracking from the United States imposed. Although OPEC production limit of 30 million barrels a day in November its member states breached widely to produce 31.57 million self-imposed.
The new bump in the price of oil was also felt on the stock. European oil majors suffered heavy losses, with the Spanish Repsol (-5.5%) leading the way. Eni fell 2.46% and Total 1.42%, all these were left in a day marked by the weakness in the stock market. If Saudi Arabia continues with this strategy of maintain a high level of production, many countries are going to benefit from the low prices. That fact is good for European economies in general. And as a small investor we think it is a good time to look at the oil sector from very up close to wait until has lost all its price and buy at the lowest as possible. For example, the Spanish company Repsol, used to be a public company, now private, but with almost no competitors in the country. It is a company very exposed in South America, so it is somehow suffering from 2 different sides. The low price of oil, and the recession that some countries in like Brazil or Argentina are struggling now.