Oil prices rose Monday after more oil-producing countries including Russia, agreed to slash production. A move aimed at pushing the oversupplied oil market into balance, so as to prop up a crude market that had been stuck in a two-year slump.
The non-OPEC producers agreed to scale back their output by 558,000 barrels a day. This is on top of the cut of 1.2 million barrels a day agreed to by OPEC late last month. The total reduction represents almost 2% of the global supply.
As a result, U.S. crude futures rose 2.58% or $1.33 to $52.83 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 2.5% or $1.36 to $55.69 a barrel on London’s ICE Futures Exchange.
In currencies, the greenback fell on Monday as the rally in crude oil prices depressed the dollar against the currencies of commodity producers.
Traders are also looking ahead to a slew of central-bank meetings this week.
The Fed will announce its latest policy decision on Wednesday and traders expect the central bank to lift U.S. borrowing costs for the first time in a year. Focus will be on the Fed’s statements for hints the central bank could raise interest rates more aggressively going forward.
The Bank of England is scheduled to meet Thursday but most traders expect the central bank to leave rates unchanged. The pound was up 0.8% to $1.2675.
In U.S. equities, the markets saw a flat day as traders eyeballed 20,000 on the Dow. Both the Dow and S&P set new intraday highs but lacked any real momentum with both the S&P and Nasdaq composite closing down on the day. The Dow managed a new record high reaching 19,796.43.
After a fierce rally since election day, the market is looking a bit tired and there is some concern that traders are buying ahead of the news with the expectation that a new administration will see a change in the economy. It would appear that traders are buying in the hope that it will all work out in 2017.
