Oil Prices Firm Up On OPEC Expectations

Oil prices firmed up on Monday as the OPEC meeting kicked off and a lot was expected from the meeting. There were reports that said that the OPEC countries could fix a base minimum price for oil in the short term. Though this report did sound a bit outlandish, it couldnt be ruled out entirely considering the desperation among some of the OPEC countries to drive up the prices of oil in a bid to bolster their economy. There was also speculation that the rift in the Middle East was also a result of the need to push the oil prices but if that indeed was the case, it has not served the goal as yet. The production cut from the OPEC countries has also not helped too much in drying up the production and building up the demand and so they might be at their wits end to do something.

Oil Prices Stay Steady

They would not have failed to notice that one of the main issues with the supply was the case of oversupply from countries like Libya and Nigeria and so one of the items in the agenda was to make them to agree to the production cap, like the OPEC countries. At the end of the meeting, it was announced that Nigeria had agreed to cap its production while there was no decision on Libya as yet. This has helped to drive the oil prices slightly higher which is in alignment with our belief that the prices are expected to move slowly and steadily higher in due course of time and they would be challenging the $50 region in the short to medium term. There will be corrections along the way but we believe that the lows are in.

Gold prices corrected slightly in lacklustre trading yesterday as it was the first day of the last week of the month when the economic news and data begin to dry up and focus shifts to month end flows and positioning. The prices corrected towards the 1253 region and they continue to consolidate and range as of this writing. The market is waiting for the FOMC minutes which it hopes, would provide it with some direction for the short and medium term as well. The dollar bulls would be expecting some support from the minutes and if they do get it, then we are likely to see a larger correction in gold prices.

Silver prices also corrected slightly in very slow trading during the course of the last 24 hours and this kind of trading is expected to last for the next couple of days.