The oil price has broken down through the $50 mark for a second straight day today as fears grow that more OPEC cartel members may not stick to the deal agreed to freeze output, while inventories in the US are set to rise this week.
At 8.15pm (GMT) crude oil was trading at $49.80c down from $50.53c in yesterday’s trading.
Iraq, which is the second largest producer in OPEC has asked to be excluded from the output freeze as the country will need the funds to fight the current war with the Islamic State which raised speculation that other countries may soon follow the same tone.
If indeed some other OPEC members renege on the deal, some predict that the whole process will fall apart and in turn drive the oil price significantly lower.
Such a scenario would not come as a big surprise, as history shows that previous deals to cut output by OPEC members have failed to materialize..
Also weighing on the gold price is a report by the U.S. government's Energy Information Administration due out tomorrow where analysts expect oil stockpiles rose by 800,000 barrels last week which would be well up on the previous week’s figures of minus 5 million barrels.
"The sentiment is it's a bit more negative," said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina. "There are some expectations that we can see a crude build." he added.
"Expect more of this choppy interplay until more concrete news emerges, as speculative buying runs into record producer selling of the futures contracts for hedging," noted Jeffrey Halley, senior market analyst at brokerage OANDA in Singapore.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 58% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
IMPORTANT: Please be informed, that our services are available for Professional Clients only. Our website is currently under review for the implementation of the correspondent amendments.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|