Oil prices broke through the US$50 a barrel mark today as speculation swarmed that Opec would move to freeze production at their upcoming meeting.
The price has now risen over US$8 a barrel in 2 weeks after Saudi energy minister Khalid bin Abdulaziz Al-Falih said that Opec would meet in the foreseeable future to discuss production cuts to stem the flood of oil in the market.
“The market has taken solace from statements made by various oil ministers including officials from Saudi Arabia hinting at coordinated action by producers to freeze output. US inventory data released on Wednesday also bolstered bullish sentiment as the EIA reported a draw in gasoline and crude oil stocks for the previous week.” Noted Shakhil Begg, an analyst with Thomson Reuters.
A less than optimistic Fed minutes meeting this week is also supporting the oil price as more analysts are starting to predict that the US Central bank won’t raise rates until sometime next year,
"Crude prices continue to benefit from the weaker US dollar post-Fed minutes with markets continuing to price in a dovish global economic outlook. Chat from Opec about production freezes is probably continuing to support the price as traders race to catch the boat before it leaves in the unlikely but profitable event that it does.” said Mike van Dulken, of Accendo Markets.
Although oil is having a strong run at the moment some fear there could be a sharp reversal in the price if Opec fails to halt output at their meeting as a positive decision has already been priced into the market.
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