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Oil Prices Surge 3% as Russia and Saudi Arabia Announce Supply Cut Extension

Published May 15, 2017
  • Oil prices showed impressive gains this morning after Saudi Arabia and Russia agreed to extend OPEC oil output cuts for nine more months until March 2018; Brent Crude and WTI prices have already moved up more than 3% today
  • Saudi energy minister Khalid al-Falih and Russian energy minister Alexander Novak declared in a joint statement that they were willing to do “whatever it takes” to reduce global oil inventories to their five-year average
  • OPEC and other participants in the supply cut deal will finalize details regarding the extension on May 25; analysts expect other deal participants to fall in line as Saudi Arabia and Russia jointly control nearly 1/4 of all global oil supplies
  • OPEC boasted impressive compliance numbers in the original production cut deal; global oil prices, however, continued to languish throughout the latter months of the January to June deal due to increased production from American shale producers
  • The loonie has gained nearly a cent against the American dollar this morning on the backs of higher oil prices
  • Investors have largely shrugged off risks stemming from another North Korean missile launch on Sunday and threats from a cyber-attack that spread around the globe over the weekend
  • The US Empire State Manufacturing Index showed a lower than expected reading of -1.0 versus a target of 7.2; Friday’s soft core inflation continues to weigh on the greenback