Crude oil prices are on track to rise for the seventh consecutive day. For the first time since June, a barrel of oil in the U.S. costs more than $50 oer barrel again. From around $44.50 a barrel towards the end of last month to today’s current high of $50.50, WTI has thus risen a solid $6 or in percentage terms more than 13%.
Crude oil prices are just shy of $50.00 per barrel as Hurricane Matthew is barreling towards the East Coast. U.S. oil supply continues to fall and OPEC and non-OPEC oil-producing nations are getting ready to meet in Istanbul to hammer down details of a joint oil production cut.
While global markets are worried about European Union tapering and the possibility off a hard Brexit, oil seems oblivious to those threats as the U.S. oil glut is receding at a historic pace. The American Petroleum Institute (API) reported that U.S. crude oil inventories fell by 7.6 million barrels.If confirmed by the Energy Information Administration (EIA), that would be the 5th weekly drawdown in inventory in a row.
Iran’s President Hassan Rouhani had his Mario Draghi moment after he basically said that crude oil producing countries should do whatever it takes to raise and stabilize oil prices. The quote, directly from a Reuters article, read, “All countries should help the committee of experts to make decisions in the November summit that raises oil prices.”
The USD was mixed against majors. The U.S. dollar appreciated against the JPY and the CHF but traded lower versus commodity currencies and the EUR and the GBP after a surprise Organization of the OPEC supply cut agreement and signs of a settlement between the U.S. Department of Justice and Deutsche Bank.
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.
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.