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Oil market firmly in the frame today

Market Analysis
2016-10-10_17-09-48

UKOil, Daily              

As Canada celebrate Thanksgiving one of the countries key exports is having anything but a holiday. The Oil price is having a very strong day on a series of positive news announcements.  Brent crude (UKOil) prices are showing a 1.5% gain today, at $53.18, settled below the day’s high at $52.80, which surpassed Friday’s peak by 1 cent to made a new four-month peak. June’s high is at $52.86, which is the loftiest level seen since October last year. While there is some doubts among analysts about Opec’s ability to implement output cuts, Saudi Arabia’s oil minister said today that he was optimistic about the plan, and that he would be meeting his Russian counterpart in the coming days to discuss Russia’s reaction to the recent output agreement. The BBC also report that Vladimir Putin says Russia is ready to join an oil output cap and supports Opec’s decision to introduce output quotas. The Russian president adds he hopes the oil cartel – of which his country is not a member – will decide to freeze output at its next meeting in November.  Opec plans to trim production to between 32.0 million and 32.5 million barrels per day from the prevailing level of 33.6 million.

Elsewhere the Venezuelan president (Nicolas Maduro – Venezuela has the world’s largest oil reserves) says that oil prices must be fairer and more realistic and that OPEC should reach an agreement and work for the stability of the oil industry. He is also reported as saying that Venezuela is looking to create a new mechanism for market stability within six months. Finally today, the Norwegian  Petroleum and Energy Minister (Tord Lien) on Bloomberg TV suggested that although it may be too early to celebrate an oil “agreement” he does see oil prices at $60 a barrel in the next twelve months.

UK Oil is robustly over $52.00 and US Oil north of $50.00, both are heading for overbought territory but the strong news flow could see a follow through this week, before a respite and retrace.

 

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Stuart Cowell

Market Analyst

HotForex

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