Oil Rallies with Return of Risk Appetite, Speculation of Production Cut
Commodities are rallying on Monday, with crude oil futures comfortably back above $50 per barrel after being as low as $48.80 earlier.
West Texas Intermediate crude oil is now up $3.52 per barrel to $53.45 on speculation that the Organization of the Petroleum Exporting Countries (OPEC) will slash production at its upcoming meeting on Nov. 29.
"We believe that if a cut is made though, it is far more likely to occur at the 17 December meeting in Oran, Algeria, than the informal meeting scheduled for Cairo this week," argued commodity analysts from Barclays Capital, who also see the bailout of Citigroup as driving markets.
Citigroup is reportedly working with the U.S. government to hammer out a $20 billion capital infusion and a plan allowing both the government and the financial institution to absorb potentially hundreds of billions in bad assets. As such, the U.S. dollar index is down 1.980 points to 86.211, prompting an increase in oil prices.
Meanwhile, Intercontinental Exchange (ICE) RBOB gasoline futures are up 2.06 cents per gallon to 108.49 cents, while heating oil at the ICE is up 4.25 cents per gallon to 174.21 cents. Natural gas futures are up 0.255 mmbtu to $6.735.
In the mining sector, Chicago Board of Trade (CBOT) gold is trading up $34.00 per ounce to $825.80 USD. In Canadian dollars, gold is up $2.50 to C$1017.28.
"Having formed a 76.4% retracement against the lows, Gold has now rallied through the resistance level at $776. Further gains are expected and we would not be surprised to see a test of resistance at $845 and possibly $931 in the [short term]," wrote Citigroup strategists. ...Continued
