The Oil prices jumped on Wednesday after the organisation members agreed to pare production first time since 2008, to reduce global oversupply, which made the prices collapse by half since mid-2014.
The 14 participating countries are responsible for the third of the global oil output (33.6 million barrels per day). As a result, the agreement should reduce the production by 1.2 million barrels a day, starting from January 2017. The group has agreed to evaluate the effectiveness in six months’ time.
From Non-OPEC countries, Russia also backed the deal agreeing to cut production from the record levels.The Russian Ministry of Energy reported that the country is ready to reduce the quota by 0.3 million barrels per day in the first half of 2017. According to Minister Novak, the deal may find new supporters in the future (namely Azerbaijan, Mexico along with others).
The Gold prices balanced declines a bit after falling to a nearly 10-month low, as soon as the Dollar began its declines. The precious metal remains under pressure as traders wait for a rate increase in the United States. Expectations of the rising oil prices intensified the inflation assumptions in the US, which are already propelled by the prospect of the increasing fiscal spending and tax cuts during Trumps administration.
The demand for Dollar continues to be upbeat after the positive US economic reports. This was considered as a new argument in favour of raising the interest rates. Investors retain a focus on today’s report in the manufacturing activityand Friday’s employment data in the US non-farm sector.
The Novembers manufacturing activity in the UK showed an unexpected contraction, because of the weakened Pounds, which is weighed down by the Brexit concerns.
The research group Markit, reported that the index of business activity in the manufacturing (PMI) sector fell last month from 54.2 in October, to a seasonally adjusted 53.4. Analysts had expected that the index would rise to 54.5 in November.