War is over if you want it. Crude oil prices closed above the 200-day moving average for the first time in 2 years on reports that Saudi Arabia and Russia had agreed to freeze production with or without Iran.
While the market worried about a report that Iraqi oil production hit a record high yesterday, it seems that despite the increase Iraq is ready for the ‘Big Freeze.” The potential for the crude oil freeze deal just went higher after it was reported that the head of Iraq’s state oil selling company said today that all of the world’s biggest producer nations must agree to freeze production to prop up the crude price, according to the Financial Times.
When Wall Street's quarterly earnings season kicks in to high gear next week, hundreds of companies will vie for the bragging rights that come from "beating the Street" - showing revenues and profits that are higher than analysts expected.
Crude oil prices are back into rally mode after a surprise draw in U.S. crude oil stocks reported by the American Petroleum Institute (API) late yesterday afternoon. In addition the freeze deal is back circulating over the media airwaves with Kuwait indicating that there were positive indications that an agreement will be reached according to a Reuters report.
While most analysts were coming to the conclusion that the crude oil supply would start to draw down eventually, that process may be starting a little quicker than anticipated. The American Petroleum Institute shocked the market by reporting that the crude oil supply fell by 4.3 million barrels. That was a far cry from the 3.5 million barrel build that was anticipated and probably puts to rest the hype that the U.S. is going to run out of crude oil storage.
The dollar fell on Tuesday to its weakest against the yen since October 2014 as investors pulled away from riskier assets, pushing shares and oil prices lower as the outlook for U.S. interest rates remained clouded.
Some are saying that crude oil prices are falling due to skepticism about OPEC/non-OPEC production freeze, but the real reason is skepticism about the strength of the global economy. Oh sure, Russian oil output hit a 30-year high coming in at 10.91 million barrels of oil a day in March and a Saudi prince is talking tough but it is the demand side of the market that is raising concerns.