The price of oil has gone on another tear overnight. This time, it was thanks to Saudi Crown Prince Mohammed bin Salman, after he voiced his support for OPEC (Organization of the Petroleum Exporting Countries) supply cuts. Telling Bloomberg, ‘We need to continue stabilizing the market.’
That sent Brent crude prices trending higher, hitting a fresh 27-month high at US$59.30 a barrel. Closing 1.5% higher overnight and now eyeing off the ever elusive US$60 price point. Prince Mohammed says that he believes the cuts will continue to benefit both OPEC and non-OPEC producers. He notes:
‘Everyone is benefiting…
‘It’s the first time we have an OPEC and non-OPEC deal in stabilizing the oil market…
‘They have seen the results. So everyone has the interest to continue keeping the agreement.’
Meanwhile, WTI crude closed at US$52.78, up 0.3% overnight as it continues to tread water. With the Australian Financial Review speaking to one analyst who comments:
‘“We’re stuck in the $US50-$US55 range,” with $US52.50 seen as an inflection point, Jay Hatfield, a New York-based portfolio manager at the InfraCap MLP exchange-traded fund, said by telephone. Next year, prices may break above $US55 a barrel, but “we see it as a running game, not a passing game. It’s going to slowly grind higher.”’
It seems the oil price has found its home. At least for the short to medium term. Barring any major unforeseen calamity, that is.
In the meantime, let’s take a look at other metal markets:
Aluminium Price — US$2,209.5 per tonne: +0.9%
Copper Price — US$6,970 per tonne: -1.5%
Rhodium Price — US$1,650 per ounce: +0.1%
Iron Ore — US$62.24 per tonne: -0.3%
Aluminium Price Back Down
Aluminium prices touch a five year high but simmer back down
US$2,215 per tonne, which was the overnight high on the London Metals Exchange (LME) for aluminium. The highest it’s risen since March 2012.
Metals Bulletin reports:
‘The change was particularly evident in the aluminium scrap pure grades, which
closely track LME prices. Market participants often structure purchases of the
material at a discount to LME prices.’
Though market participants don’t think the higher price will hold. With one UK trader commenting, ‘It feels off kilter. It is out of control — our control’.
Copper Price Gets Nervous
All eyes were on the European Central Bank, waiting to see what Mario Draghi would do. It seems traders were looking for some good news to lift the Euro against the US dollar. Which would have likely increased commodity buying.
Instead, the tone from Draghi sent the euro tumbling. Not quite the result traders were looking for, no doubt.
Rhodium Price Soars in 2017
The price of little known metal rhodium, part of the platinum group of metals, has flown under the radar this year. It’s up more than 40% this month and hit a six-year high two days ago. Which it has plateaued at for now.
Rupen Raithatha, who works for the Johnson Matthey Company said:
‘It’s a small market…
‘If large purchases all come together that can have a significant impact on pricing.
‘The South African producers bled their stocks dry to achieve a balance (in the market) last year…
‘They have not had much metal to cope with current demand, which has seen some of a surge.’
Iron Ore Hits a Roadblock
Iron ore prices are almost totally neutral. They’ve stopped their disastrous plunge, but the price isn’t going up either. It’s in the doldrums right now and doesn’t look to be heading in either direction anytime soon. Never say never though.
It certainly hasn’t been helped by the falling Aussie dollar. But if you’ve been following our editor Vern Gowdie, that shouldn’t surprise you. Vern predicted the dollar crash was coming and there could be more pain to come. Read the full report, for free, right now.
Junior Analyst, Markets & Money