Oil Price Steady Around $50 as Majority of OPEC Gains Hold with Rise to $60 in Prospect

Share On Facebook
share on Linkedin

Oil prices surged by over 8% yesterday following the announcement that OPEC had agreed a landmark deal to cut oil production by 1.2 million barrels, spread between the member countries. Russia has also agreed to a cut in solidarity and it is hoped that with other non-OPEC oil exporters such as Azerbaijan, an addition 600,000 barrels will be reduced from daily output, combining to almost 2% of global supply. The deal was arrived at as a result of a significant compromise by Saudi Arabia on how much of the cut Iran should carry and is the first coordinated oil output reduction in over 8 years.

©

Crude oil price has dropped back slightly today but has managed to hold onto the large part of yesterday’s gains and is at around $50 a barrel with WTI at $49.24. Brent Crude for February delivery is up at $51.74, with January contract changing hands for $50.47. Many market commentators believe that further confirmation of the non-OPEC 600,000-barrel reduction will push oil prices up to $55 or beyond to $60 by the end of the year and into early next year.

However, there were also words of warning from the likes of Goldman Sachs and other market analysts that markets should not expect oil price to hold at $60 if it reaches that level. Between $55 and $60 will result in renewed investment and activity by producers of more expensive oil, such as U.S. shale producers and North Sea oilfields. Quoted in Bloomberg, Keigo Matsubara, CFO of Mitsui & Co., a Japanese trading house with investments in the U.S. shale industry, stated:

Gold price came under new pressure yesterday and not only from rising oil prices. The market has now fully priced in December interest rate hikes and the USD has strengthened further as a result. The appointment of the experienced Steve Mnuchin as U.S. Treasury secretary further increased market confidence and subsequent risk-on sentiment. Mnuchin is expected to provide a buffer to Trump’s presidency resulting in severe protectionist moves that would be expected to harm growth.

The most active contract on the US metals exchange Comex is gold for February delivery, which dropped to its lowest level since February last year, at $1,163.80 0z. In London today, gold’s Spot price did improve 0.25 percent to $1,175.36 an ounce as the dollar eased slightly. Silver, platinum and palladium are also up 0.5%, 0.6% and 0.8%, respectively.

Base metals are up today after a correction over the past couple of days, boosted by oil prices rises and PMI data out of China surpassing expectations. Three month prices for copper were up 0.4%, the same for tin and lead and zinc both added 1.9%, with nickel gaining 0.7% and aluminium 0.6%.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This article was provided by Windsor Brokers. Click here for more information.


This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20200924 00:32:44