Groundwork being laid for next oil crisis

Markets don’t believe Opec’s output plans will work Commodity prices are driven by supply and demand though leavened with sentiment for lengthy periods. There is no risk premium in the oil price. Speculators remain sceptical about Opec and Russia’s commitment to maintain lower oil output levels despite almost perfect discipline over the last two years.

Markets shrug off Venezuela’s crisis even though Venezuelan oil production has fallen 65% since former president Hugo Chavez took power. Much Venezuelan oil is heavy and sour, and must be refined in American refineries. However, Washington now refuses to pay oil revenues to Caracas.