Crude Oil Prices Gains on OPEC Deal Hopes May Prove Fleeting

London (Nov 22)  Crude oil prices shot higher following encouraging comments about implementation of an OPEC supply cut accord unveiled in September. Cartel members have struggled to reach agreement on output cut quotas due to be unveiled at a meeting on November 30. 

Iraqi Oil Minister Jabbar al-Luaibi said it will offer proposals on reaching agreement. This echoed yesterday’s supportive remarks from Iran’s Oil Minister and Russian President Vladimir Putin. While Russia is not an OPEC member, the major producer’s participation is seen as essential for the scheme’s success.

Jaw-boning can only take prices so far however, and it may be difficult for the move higher to continue without a steady stream of supportive commentary. Another large stockpiles build reported in the upcoming API weekly inventories data may undermine follow-through and force the WTI benchmark lower. 

Gold prices edged higher as the so-called “Trump trade” went in reverse amid a lull in fresh fodder feeding the narrative (as expected). Traders had been betting that the President-elect’s platform will prove inflationary, boosting Fed rate hike bets and sinking the yellow metal. 

Looking ahead, the corrective recovery may continue as markets to digest volatility sparked in the aftermath of the US presidential election. The liquidity drain typical ahead of the Thanksgiving holiday may encourage this dynamic, though news-flow about key Trump cabinet appoints may disrupt things.

Source: DailyFX