The price of Brent Crude has climbed 2.13% overnight, reaching US$56.99 a barrel. While the benchmark WTI Oil price peaked over US$50 once more.
The rise has been linked to a supposed deal between the Saudis and Russia. The two OPEC affiliates are expected to agree on limiting production throughout 2018. Pushing US prices higher.
The production cut which was set to expire in March, could now be extended to the end of next year, according to Reuters’ reports.
It comes as the Saudi King, Salman, visits Moscow. Risk consultancy firm Eurasia Group comments,
‘Putin and Salman will most likely reach, but not announce, an agreement to extend the OPEC/non-OPEC production deal, though with a commitment to taper the cuts…’
The news comes as the US Energy Information Administration said that US oil production topped out at 9.56 million barrels per day in the final week of September. The highest levels it’s been in over two years.
Whether the Moscow and Saudi-led supply cut, which is estimated to be 1.8 million barrels per day, will continue to boost US production is the big question mark.
Meanwhile, across the metals market, most prices were also up.
Zinc Price – US$ 3,369.5 a tonne: +1.38%
Copper Price – US$6,677 a tonne: +2.38%
Aluminium Price – US$2,138.5 a tonne: +1.16%
Iron Ore Price – $61.48 a tonne: -0.9%
Zinc Price Continues Its Record Year
The price of Zinc has now officially hit a 10-year high. The base metal is up 20% this year, one of the London Metal Exchange’s top performers.
But, not everyone is celebrating.
According to Metal’s Bulletin, China’s zinc miners are missing out on the profits. Their output has declined 7.4% compared to last year. In fact, China has had to increase its zinc imports with a sluggish domestic supply.
Several analysts are pointing the finger squarely at the Chinese government. The ongoing environmental checks and regulation crackdown continues to weigh on local producers.
Soochow Futures analyst Chen Long, who visited some of the mines, told Metal’s Bulletin,
‘I have heard of Yunnan [Chinese province, with several of the country’s oldest zinc mines] officials monitoring air pollution and sewage discharge of some zinc mines 24 hours a day…
‘There are over 1,000 mines in southwestern China, yet there are only dozens complying with the standard. You can tell just how many have been ordered to suspend operation…’
It’s a problem without a short-term solution. And Chinese miners are clearly frustrated as they continue to miss out.
Copper Prices Surge on Quake Fears
Rumours have played havoc with copper prices overnight.
An earthquake in Chile was thought to have damaged the operations of Codelco and Antofagasta plc [LON:ANTO]. Two of the country’s biggest copper miners.
And with Chile accounting for 30% of the world’s total copper supply it was easy to see why traders were spooked.
It caused the copper price to rise as high as US$6,689 a tonne. However as reports came in that the miners were operating normally the price paired back slightly.
It’s still an ongoing story, so expect more developments as reports come in.
Aluminium Supply Fears in 2018
The 32nd Metal Bulletin Aluminium conference came to a conclusion last week. And the outlook is murky at best.
The world (outside of China) is down to 6 million tonnes of off-exchange aluminium. At least that’s what market participants are estimating.
And total stocks including China and exchanges may only be double that. It could make next year extremely turbulent.
As Metal’s Bulletin reports,
‘According to Metal Bulletin Research, the world market balance will move into a 847,000-tonne deficit in 2018 from a 190,000-tonne surplus in 2017.’
Iron Ore’s Downward Spiral
Finally, iron ore continues to fall. It’s now at its lowest level since June 27.
Trading was quiet as China’s market continues their Golden Week celebrations. We’ll just have to wait until next week to see how the market fares upon their return.
And iron ore isn’t the only thing that’s falling as the Aussie dollar continues its slide as well. Find out how this could affect you in our free report right here.
Junior Analyst, Markets & Money