Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
[Daniel J. Graeber, UPI]
Crude oil prices continued to test new highs in Monday trading, supported by a growing consensus that OPEC will extend a production cut agreement in November.
The price for Brent crude oil touched $60 per barrel on Friday, for the first time in years, as rhetoric pointed to a decision by the Organization of Petroleum Exporting Countries to extend a plan to trim production in an effort to balance an oversupplied market.
That rhetoric was confirmed during the weekend by Saudi Arabia’s government, which affirmed its “readiness to extend the production cut agreement.” On Monday, Suhail al-Mazrouei, the energy minister for the United Arab Emirates, said that while nothing would be decided until the next OPEC meeting in November, extending the agreement was necessary.
The price for Brent crude oil was up 0.35 percent to $60.65 per barrel as of 9:10 a.m. EDT. The price for West Texas Intermediate, the U.S. benchmark, was up 0.2 percent to $54.01 per barrel.
The spread, or difference, between Brent and WTI continues to support higher U.S. crude oil exports, which could offset some of the OPEC effort. Saudi Crown Prince Mohammed bin Salman said during the weekend, however, that “high demand for oil has absorbed the increase in shale oil production.”
Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in an emailed market report that “if it were not for U.S. exports surging, prices would be higher than they are.”
There may be something of a political risk premium added for commodity prices in Monday trading. Paul Manafort, a former campaign chairman to U.S. President Donald Trump, and Manafort’s junior partner, Rick Gates, were indicted Monday on 12 charges as part of the probe into Russian ties to Donald Trump’s run for president last year.
The rally may be supported further by U.S. data showing personal spending for September reached $136 billion, an increase of 1 percent from the previous month. As with most financial data from the United States recently, the trend may reflect the increased activity associated with the hurricanes that swept through southern U.S. states and island territories during the quarter.
The rally in crude oil prices could be reaching a leveling point. Stephen Brennock, an analyst with London oil broker PVM, said an emailed market report a slight deceleration in the Chinese economy suggests “China is on the brink of wobble,” though some of that pressure may be offset by a surging India.A Subsidiary of Price Holdings, Inc. – a Diversified Financial Services Firm. Member NIBA, NFA Past results are not necessarily indicative of future results. Investing in futures can involve substantial risk of loss & is not suitable for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or futures. The Price Futures Group, its officers, directors, employees, and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Reproduction and/or distribution of any portion of this report are strictly prohibited without the written permission of the author. Trading in futures contracts, options on futures contracts, and forward contracts is not suitable for all investors and involves substantial risks. ©2018