After regaining strength last week, crude oil prices are bullish in the early hours on Monday. Crude oil started the week on a positive note and rose to three-week high price levels.
Extension of supply cut agreement
Crude oil prices regained strength last week amid a decline in crude oil inventory levels and expectations of an extension of the supply cut agreement. Prices rose after comments from Saudi Arabia and Russia’s energy ministers about extending supply cuts. According to top producers, the supply cut agreement should be extended until March 2018, which is longer than the original six-month extension. The supply cut agreement that came into action at the beginning of the year didn’t support oil prices due to a rise in the oil inventory and an increase in US shale oil production. The extension of the supply agreement is expected to bring supply-demand balance to the oil market.
OPEC and non-OPEC members are scheduled to meet on May 25 to discuss the possible extension of the supply cut agreement. At 6:40 AM EST, West Texas Intermediate crude oil futures contracts for June 2017 delivery were trading at $49.16 per barrel—a gain of ~2.8%. Brent crude futures contracts for July 2017 delivery rose ~2.7% and were trading at $52.20 per barrel. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) closed at $35.29 after falling 0.4% on May 12.
After gaining for three consecutive trading days, copper continued to strengthen on Monday. In the early hours, copper is moving higher and trading at two-week high price levels. Weakness in the dollar along with China’s announcement of the “Silk Road” project with infrastructure spending of $124 billion are the factors that are supporting copper. The PowerShares DB Base Metals ETF (DBB) rose 0.14%, while the SPDR S&P Metals & Mining ETF (XME) rose 0.24% on May 12.
Gold (GLD) and silver (SLW) are stable in the early hours amid a weaker dollar. Gold is also supported by mixed sentiment on Wall Street amid political tension. Read Wall Street Sentiment Remained Mixed, NASDAQ Rose Again to learn more about the sentiment on Wall Street. Platinum and palladium are stronger in the early hours.