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USD/CAD at key support as oil rally sputters
Up until late last week, USD/CAD had been falling sharply from the key 1.3600 resistance level as the US dollar’s strong uptrend had begun to falter and the Canadian dollar had been boosted by surging crude oil prices. Market optimism that the new year would bring lower oil production among major OPEC and non-OPEC oil producers was prompted by successful agreements reached late last year to coordinate output cuts. This optimism led to a strong rally for crude oil prices throughout much of December, which helped push up the oil-linked Canadian dollar and pressure USD/CAD.
Crude surges as non-OPEC producers agree oil output cut
Crude oil prices surged a huge $3 dollars or 5% higher at the Asian open with Brent briefly trading north of $57 and WTI above $54 a barrel before pulling back slightly. Global stock index futures have correspondingly gapped higher with expectations that energy and other oil-related stocks will rise in tandem with crude prices when the exchanges open in Europe and Wall Street.
It is all about OPEC today
For obvious reasons, all the focus is on the OPEC meeting. As we pointed out the possibility yesterday, oil prices have bounced back very strongly today on renewed hopes that oil ministers will, after all, be able to hammer out a deal later on to limit crude production. Brent was up a good 8% at the time of this writing. No official announcement has been made yet, but the markets seem convinced about the outcome. The only thing speculators are not too sure about yet is the detail of the deal: who will cut oil production and by how much, and who will freeze and at what levels?
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OPEC preview: will Iran call Saudi’s bluff?
Lots of headlines have come out ahead of tomorrow’s much-anticipated OPEC meeting. They have been largely oil-negative with Iran in particular being very vocal, saying that it won’t reduce its output and at the same time demanding that Saudi Arabia should shoulder most of the responsibility. Iraq, too, wants to be except from production cuts. We have heard it all before...
OPEC's decision will likely boost oil prices further in short term
The OPEC surprised the market yesterday and actually managed to agree on a production cut, with details to follow in their November meeting. Up to 800,000 barrels of oil per day will potentially be removed from the oversupplied market which would lower the production target for the cartel to a range between 32.5 and 33.0 mb/d. Oil prices surged some 6% in the immediate aftermath of the news, though they have since eased off a tad as traders make a more sober assessment of the whole situation.
Oil higher ahead of OPEC decision
Crude prices jumped in reaction to the latest weekly US crude stockpiles data but then quickly went into reverse gear, before bouncing back once again. Traders were in no mood to take any chances ahead of the conclusion of talks between the OPEC and non-OPEC members in Algeria, especially given how headline-driven prices have become.
Saudi oil output offer report lifts Brent for fourth day
Ahead of next week’s talks in Algeria, Reuters reported this morning that Saudi Arabia is apparently willing to reduce its oil output for as long as Iran agrees to freeze its production at current levels.
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