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NISM Certifications · NISM-Series-XV: Research Analyst · Fundamental Analysis of Commodities

Which of the following developments would most likely push up the price of crude oil, other factors remaining unchanged?

A production cut by major OPEC+ producers would most likely raise crude prices because it reduces supply. Higher shale output, weaker industrial demand and rising inventories all indicate surplus supply or lower demand, which pressure prices downward.

  1. AA sudden increase in shale oil output
  2. BA sharp slowdown in global industrial activity
  3. CA production cut announced by major OPEC+ producersCorrect
  4. DA rise in global crude inventories above the seasonal average

Explanation

A supply cut reduces availability and tends to raise prices. Higher output, weaker industrial demand and rising inventories all point to supply exceeding demand, which is bearish for prices.

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