Oil Prices Rise Steadily As OPEC Looms

Oil prices continued to shoot higher to cap off a great week for the bulls. Except for small corrections here and there, the oil prices have been moving steadily higher since they made a low in the $43 region at the beginning of the month. The oil prices have been helped by the decreasing production data and also the decreasing inventory data. We have mentioned several times that though the production cut deal has been announced and has been in effect for the past few months, the real value of these production cuts would be seen only if the incoming production and inventory data supports it with a drop. Without this, there would be no meaning to the production cuts and thats what we saw in the first couple of months in this year where the production cuts seemed to have zero effect on the inventory with production continuing to be high in countries like Libya which were not part of the deal.

Oil Likely to Remain Buoyed

Over this weekend, we also had reports that said that the OPEC could surprise the markets with the announcement of a much larger cut this week. Already, the oil prices have been buoyed over the last week by reports that the production cut deal could be extended beyond this year. Now, we have reports that the production cut is likely to be much larger and also extended for a much longer time than what was expected and this is likely to support the oil prices even more. If this does come true, then we should see the oil prices move towards the $55 region in due course of time and we believe that the producers would be happy if the oil prices move towards $60 ultimately.

Gold prices continued to consolidate within a tight range for the second day on Friday as the risks and the headlines over the political turmoil in the US began to recede slowly. With Trump also out on his international journeys, his tweets and troubles have taken a small break and this has helped to calm down the markets and helped to keep the gold prices under control. We believe that his troubles are not fully over as yet and so we should see the gold prices continue to consolidate and range with a bullish bias till the next piece of news.

Silver prices, for once, chose to buck the trend of following the gold prices and rose sharply over $17 for a brief while but was quickly met with a large amount of selling and is now back below $17 and continues to consolidate.