Oil Surges on OPEC Production Agreement Hopes

Oil prices rose 3 percent on Monday to their highest in three weeks, catching a lift from a weaker dollar, as OPEC appeared to be moving closer to agreeing an output cut when it meets next week.

Brent crude futures LCOc1 gained $1.44 to $48.30 a barrel by 1423 GMT, having touched their loftiest level since Nov. 1, while U.S. West Texas Intermediate (WTI) futures CLc1 strengthened by $2.01 to $47.70 a barrel.

Brent has risen 11 percent in a week since OPEC’s de facto leader Saudi Arabia started a diplomatic charm offensive to persuade the group’s more reluctant members to join its proposed output cut.

The dollar eased off last week’s 13-1/2-year highs as Treasury yields nudged lower, bolstering oil and the broader commodities complex including copper CMCU3 and gold XAU=.

“The possibility for such a deal has increased, but there is also the risk of course that the market is overreacting here, especially as the agreement will really have to be a surprise to push oil prices very much higher,” ABN Amro chief energy economist Hans van Cleef said.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza