How High Will Oil Go Before Burning Out?

May 15, 2017 11:30AM CDT

Commodity-linked stocks and world currencies got a lift on Monday from a surge in crude oil prices after major producers Saudi Arabia and Russia said they would extend oil supply cuts in 2018. Energy ministers from the world’s top two oil producers said cuts that were set to expire next month should continue until March, longer than an optional six-month extension specified in the deal. The Organization of the Petroleum Exporting Countries meets in Vienna on May 25 to consider the extension.

U.S. crude rose 2.72 percent to $4914 per barrel and Brent was last at the $52.09, up 2.46 percent on the day. The news from the energy sector more than offset concern over the weekend after a successful missile test by North Korea and a cyber-attack that affected computers in more than 150 countries.

The currencies of resource-linked economies got a boost from the jump in oil prices.  The Canadian dollar hit its highest level in over two weeks against the greenback. The U.S. dollar was also hurt by the weak data on New York State area manufacturing.

The rally in crude doesn’t look like it will be able to stand up in the face of over supply markets.  Traders should be attentive and consider selling the market after the weekly inventory report that comes out on Wednesday at 10:30 ET. 

 

Jul '17 Crude Light Daily ChartCrude Light Daily Chart

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