Oil Climbs on Hope of OPEC Cut Extension, Gold Slips on Brexit

Oil prices continued to rise on Wednesday amid expectations on an OPEC Cut Extension. The gains came despite an increase in crude inventories.

West Texas Intermediate crude gained 22 cents to trade at $48.59 per barrel. Brent crude gained 25 cents to trade at $51.58 per barrel.

Dollar Oil

Armed protesters have blocked oil production from Sharara and Wafa in Libya, reducing output by 250,000 barrels per day and causing the National Oil Corp to declare force majeure.

Libya Excluded From OPEC Cut Extension

 

Libya was excluded from the OPEC-led cuts.

Bijan Zanganeh, Iranian Oil Minister, said the agreement between OPEC and other oil producers to cut production by 1.8 million barrels per day was likely to be extended.

Oil prices climbed higher despite U.S. crude stocks increasing by 1.9 million barrels to 535.5 million barrels. The U.S. Energy Information Administration will publish official crude data on Wednesday.

Meanwhile, gold prices fell on Wednesday during European morning trade, pulling further from its highest level in a month, as investors prepared for a formal Brexit procedures.

British Prime Minister Theresa May is expected to trigger Article 50 of the Lisbon Treaty today and initiate the two-year process of exiting the European Union. May will send a letter to Donald Tusk, European Council President, to formally announce Britain’s exit from the bloc.

Gold futures fell 0.5% to $1,249.65 per troy ounce. Spot gold fell $1.90 to $1,250.10 per troy ounce.

Investors are still awaiting comments from Federal Reserve officials to look for clues on the timing of the next rate hike. Boston Fed President Eric Rosengren, San Francisco Fed President John Williams and Chicago Fed President Charles Evans.

Fed Vice Chairman Stanley Fischer said in interview that two more rate hikes this year was “about right.”

Gold and the U.S. dollar have an inverse relationship.

Silver futures for May lost 15 cents to trade at $18.10 per troy ounce. Platinum lost 0.3% to trade at $958.35 per ounce. Palladium fell 0.1% to $792.10 per ounce.