Oil Hits Its Highest Price Since Mid-2015
Mon Dec 12 2016
Lucy Harlow (3503 articles)

Oil Hits Its Highest Price Since Mid-2015

Oil prices surged to an 18-month high on Monday after the world’s top crude producers agreed to the first joint output cut since 2001, sparking concerns about inflation, which pushed up U.S. Treasury yields to a more than two-year peak.

Yields also gained ahead of a two-day Federal Reserve policy meeting that starts on Tuesday, where the U.S. central bank is expected to raise interest rates for the only the second time since the global financial crisis.

The gain in oil prices followed the weekend agreement between OPEC and key non-OPEC states. Brent crude futures were up $ 1.76 at $ 56.09 per barrel, a 3.2% rise, after hitting a session peak of $ 57.89, the highest since July 2015.

U.S. crude futures were up $ 1.73 at $ 53.24 a barrel, a 3.4% gain.

There was particular surprise as Saudi Arabia, the world’s top producer, said it may cut its output even more than it had first suggested at an Organization of the Petroleum Exporting Countries (OPEC) meeting just over a week ago.

Energy shares jumped, helping lift the Dow Jones industrial average and S&P 500 to record intraday highs in early trading on Monday. The S&P 500 spx later retreated, with consumer discretionary shares among the biggest drags.

The OPEC news and surge in oil prices were “good news for economic growth in the U.S. as well as Russia and others. But it will be to some extent tempered by a little bit of an impact on consumer spending,” said Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany, N.Y.

“There are so many reasons to believe inflation is going to be headed higher, and this just adds fuel to that fire,” which is why bond yields are up and the U.S. stock market is mixed, he said.

Lucy Harlow

Lucy Harlow

Lucy Harlow is a senior Correspondent who has been reporting about Commodities, Currencies, Bonds etc across the globe for last 10 years. She reports from New York and tracks daily movement of various indices across the Globe


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