Some crude oil traders are having a hard time getting their heads around the impact of the new OPEC accord. While many still express skepticism that this agreement will reduce supply, they are missing the point. For the first time in almost 8 years the cartel has agreed to limit production.
Sterling slumped to a three-year low against the euro on Monday as Britain set a March deadline to start divorce proceedings from the European Union, while worries over Deutsche Bank and Europe's banking sector kept share prices in check.
The S&P 500 bounced higher today (after struggling yesterday), up .65% to 2162. We believe the near term profile target of 2170 will get approached. Our multiday target according to the profile is 2187.
Crude oil prices fell as the dollar strengthened on Friday and investors cashed in on crude's 6% one-day rise after OPEC members agreed on output cuts for the first time in eight years to stifle a two-year price slide.
Crude oil prices soared in the aftermath of the first OPEC deal in 8 years and now we have to look at the demand side. While the historic OPEC and soon to be Non-OPEC accord will put a floor under prices, demand fears are causing a bit of ahead-of- weekend profit taking.
The dollar hit an eight-day high against the safe-haven yen on Thursday after an OPEC deal to cut oil output spurred a move into riskier assets, though questions over the efficacy of the agreement left the greenback off its earlier highs.
OPEC agreed on Wednesday modest oil output cuts in the first such deal since 2008, with the group's leader Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices.
OPEC surprised the market yesterday and actually managed to agree on a production cut, with details to follow in their November meeting. Up to 800,000 barrels of oil per day will potentially be removed from the oversupplied market which would lower the production target for the cartel to a range between 32.5 and 33.0 mb/d. Crude oil prices surged some 6% in the immediate aftermath of the news, though they have since eased off a tad as traders make a more sober assessment of the whole situation.