Oil prices just fell to their lowest in four years

Emma Haslett
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Ali al-Naimi has suggested he expects market forces to stabilise oil prices eventually (Source: Getty)

The fall in oil prices continues apace. The price of both West Texas Intermediate (WTI) and Brent oil fell to $72.78 and $76 per barrel respectively this morning - both four-year lows - as traders nervously awaited the outcome of a meeting of the Opec group of oil-producing countries in Vienna today.

The 12-member group is meeting as the price of oil continues to slide on concerns of an over-supply in the next few months. It had been hoped the group would come to an agreement around cutting production by at least one million barrels a day, but that now looks unlikely.

Although Saudi Arabian oil minister Ali al-Naimi hinted yesterday Gulf producers - Saudi, Kuwait, Qatar and the UAE - had come to an agreement, the consensus is that it probably doesn't involve a cut in production.

Earlier in the day, al-Naimi had said he expected the oil market to "stabilise itself eventually", suggesting he has enough confidence in market forces to avoid a curb in output for now.

But even if a cut is announced, will it be enough to stabilise prices in the long-term? Jameel Ahmad, chief market analyst at FXTM, thinks not.

The longer term outlook for both crude and Brent oil is that the commodity will likely continue to trade in a bearish direction in the longer term. Around this time next year, the current forecast is that the Federal Reserve will have begun raising US interest rates, which will not only increase substantial demand for the US dollar but also pressure commodity prices. This is probably another reason why there is hesitation from some to cut production, because fears will resurface regarding oil prices in the future anyway.

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