Commodities: Crude bubbles higher on hopes Opec will extend output curbs next week
(ShareCast News) - Crude-oil futures bubbled their way to roughly month highs on hopes that Opec will extend its output curbs when it meets next week in Vienna.
Oil prices have enjoyed upticks in recent weeks on hopes the cartel will extend its production pledge into 2018, but have been buffeted by US industry stores and rig data.
At 15:37 BST, Nymex-priced West Texas Intermediate crude was up 2.01% to $50.34 a barrel. Intercontinental Exchange-traded Brent was added 2.02% to $53.57 a barrel.
On Wednesday, the US Energy Information Administration reported a drop in US oil stores last week, while on Tuesday the American Petroleum Institute reported a rise.
"The price of oil has also continued to rise this morning after the latest report that Opec are looking at extending and deepening their production cuts," said David Cheetham of XTB.
The chief market analyst added that, ahead of the 25 May meeting, the market now seemed to be pricing in some further measures to support the price of crude.
Craig Erlam, senior market analyst at Oanda, was another who noted that crude's rise appeared to be linked to hopes of a curb extension, but expressed a note of caution.
"Reports this morning that Opec is considering not just extending but also deepening the cuts in a bid to bring the market back into balance is likely supporting the move," he said.
"Of course, just because Opec is considering this and the Russian energy minister has suggested a willingness to support an extension, it doesn't mean it will happen, especially with regards to the deeper cuts as reported this morning," he said.
Chris Beauchamp, chief market analyst at IG, was another who focused on the risk to the prcies of WTI and Brent if any fresh deal from Opec failed to live up to either the hype or the bullish positioning seen among investors.
"Any drop back below $50 would be a very bearish development, but we'll probably have to wait until after the event to see this occur."
Meanwhile, on Comex, gold was down 0.13% to $1251.20 an ounce. Silver rose 0.87% to $16.82 an ounce, and copper gained 1.62% to 257.25 cents a pound.
FXTM research analyst Lukman Otunuga underscored gold's safe-haven appeal given recent political unrest in Washington.
"Bulls still remain in control despite the depreciation with prices destined to appreciate higher as uncertainty quickens the flight to safety," he said.
"From a technical standpoint, buyers need to secure a daily close above $1260 for an incline higher towards $1275."
Mike van Dulken, head of research at Accendo Markets, added that the weaker dollar was helping US crude rally back to a $50 handle, dragging copper, iron ore and precious metals along with.
On the London Metals Exchange, three-month industrial metals were down. Zinc fell 1.09%, tin lost 0.88%, copper eased 0.53% and aluminum shed 0.08%.