Oil prices have been shooting higher over the last 24 hours and this is something that we have been saying for more than a month now. When the oil prices
Oil prices have been shooting higher over the last 24 hours and this is something that we have been saying for more than a month now. When the oil prices were floundering at their lows below $43, we did say that we believed that the lows were in as far as the oil prices were concerned and that the only direction is up. We also mentioned that this rise is likely to be slow and steady as the fundamentals and market dynamics get readjusted. Yesterday we saw further evidence of that as the oil prices shot through $48 and continue to look strong during the course of their strong and steady rise. The trigger for the latest move up has been the OPEC meeting which was held over the past couple of days.
A lot was expected from the meeting and it has to be said that the meeting did deliver on many of its promises. We saw that Nigeria had agreed to a production cut similar to those followed by the OPEC countries. It had been one of the 2 countries, the other being Libya, which had boosted its oil production during the production cut period, thus negating the effects of the production cut but with Nigeria on board, they are likely to have more control on the supply and hence the prices. We also saw Saudi Arabia announce that they would be cutting their production even more, in a bid to push the oil prices higher and a combination of these announcement has helped oil prices move higher. This also shows that the oil producers are determined to find some way to push the oil prices higher and this should further encourage the bulls.
Gold prices corrected lower over the last 24 hours as the dollar has staged a mini recovery during this period. Over the last couple of days, we have seen the gold prices fall from above 1255 to below 1250 as of this writing and this drop is likely to continue atleast until the 1242 region. We have the FOMC meeting minutes that will be released later in the day today and if there is any hint of support for the dollar, then we should see the gold prices correcting even further.
Silver prices also joined gold in correcting lower though the amount of correction has been comparatively lower. Like gold, the market awaits the minutes from the FOMC meeting to determine its next direction.
Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.