Brent Moves Past $55 Despite Threats From Non-OPEC Producers

Brent crude oil broke above $55-per-barrel threshold on Monday, trading at a 16-month high, as rising prospects of a tightening market after an OPEC output cap deal overshadowed concerns over mounting production from producers outside of the cartel.

The international oil benchmark hit an intra-day low at $55.32 per barrel thanks to OPEC sentiment that continued to give speculators impetus to increase bets on higher oil prices.

Mohammed Sanusi Barkindo, OPEC’s secretary general stated at an energy conference on Monday that oil demand in Asia is likely to keep on rising steadily. Demand from India alone is expected to jump to more than 10 million barrels per day (bpd) by 2040, from 4.1 million barrels per day now, said Barkindo.

Meanwhile, the potential output cut agreement between OPEC and Russia might not be as deep as initially anticipated. Moscow has agreed to slash its output by 300,000 bpd in early 2017 and planned to use its November oil production as its baseline for the cut. However, Russia’s average daily oil output in November was reported to reach its highest in almost 30 years at 11.21 million bpd, suggesting that the nation’s output will remain high even after a reduction.

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