U.S. oil prices hit their highest since 2014 on Wednesday due to ongoing production cuts led by OPEC as well as healthy demand
U.S. oil prices hit highest since 2014, but analysts warn of overheated market – U.S. oil prices hit their highest since 2014 on Wednesday due to ongoing production cuts led by OPEC as well as healthy demand, although analysts cautioned that markets may be overheating. A broad global market rally, including stocks, has also been fuelling investment into crude oil futures. “The extension of the OPEC agreement … and declining inventories are all helping to drive the price higher,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities. In an effort to prop up prices, the Organization of the Petroleum Exporting Countries (OPEC) together with Russia and a group of other producers last November extended an output cut deal that was due to expire in March this year to cover all of 2018. The cuts, which have mostly targeted Europe and North America, were aimed at reducing a global supply overhang that had dogged oil markets since 2014.
Gold Prices Edge Higher as Dollar Slips – Gold prices moved higher on Wednesday as the dollar dropped to one-and-a-half month lows against the yen amid speculation that the Bank of Japan could move to scale back its massive stimulus program later this year. The dollar extended losses against the yen into a second session, falling to the lowest levels since December 1 after the Bank of Japan tweaked the size of its bond purchases on Tuesday, reminding investors that it will eventually normalize monetary policy. Demand for the dollar continued to be underpinned by expectations for further interest rates hikes by the Federal Reserve this year after Friday’s U.S. jobs report did little to alter the outlook for monetary tightening. While the rate of jobs growth cooled in December a pick-up in wage growth pointed to strength in the labor market. Recent weakness in the dollar had supported gold prices by making the dollar-denominated metal cheaper for holders of other currencies. Last week, gold registered a fourth consecutive weekly gain for the first time since April.
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