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Brent crude and WTI prices, which usually move in approximate correlation have diverged on Tuesday as Brent crude futures slipped 10 cents to $55.76 shortly before 09:00 GMT, while WTI futures gained 15 cents to $52.51 a barrel. Brent crude futures had been down as low as $55.55 a couple of hours earlier and WTI also from $52.30 a barrel to move to gains on its previous closing price.
Saudi Arabia reaffirming its commitment to supply cuts has been a positive influence on oil prices with evidence of increasing production in the U.S. a drag. Yesterday, Saudi Energy Minister Khalid al-Falih, in Abu Dhabi for an industry event, commented:
“Many countries are actually going the extra mile and cutting beyond what they’ve committed … I am confident about the impact … and I am very encouraged about those first two weeks.”
Al-Falih also reiterated that he still believes that the initial 6-month OPEC, and non-OPEC partners, commitment period to the 1.8 million bpd cuts will prove sufficient to rebalance global inventories.
Countering any optimism that markets may have taken from Al-Falih’s assertions yesterday was news that U.S. crude output has reached production levels last seen in 2014, with 9 million bpd, up from 8.5 million bpd in June. The supply side’s confidence that prices will hold about $50 over the first half of 2017 at least is leading to a rise in production.
Gold is up again today, its seventh consecutive day of gains, on a falling U.S. dollar. Trump comments that the dollar is too strong and is hurting U.S. competitiveness have led to a softening of the currency today, even against pound sterling, which has slumped since the beginning of the week. As well as the weakening dollar, gold is receiving some support from market nerves prior to Theresa May’s Brexit speech today and Trump’s Friday inauguration as president. Gold has risen by almost 1% today to $1,213 oz.
In base metals, copper is down 1.4% today despite the weakening U.S. dollar, the strength of which as been a drag on metals this year.
