Crude oil prices continued to push upward after Russian Energy Minister Alexander Novak said his country would be open to talks about a joint output freeze with OPEC and non-OPEC producers. The comments were made in an interview with Saudi Arabian newspaper Asharq Al-Awsat and bolster hopes of a deal to boost prices that have buoyed the WTI contract since last week.
The article first appeared on Oil-Trading.CO at http://www.oil-trading.co/crude-oil-analysis/crude-oil-extends-gains-as-russia-stokes-output-deal-hopes
On balance, the emergence of a supply-side deal seems unlikely considering the key parties to any such arrangement – Iran, Saudi Arabia and Russia – are currently on opposing sides of at least two active military conflicts (principally in Syria). Indeed, similar-sounding efforts have foundered recently. A lull in headline-grabbing news flow may offer space for skepticism to emerge on these grounds, undermining upside follow-through. Weekly API inventory data may overtake the spotlight in the near term however.
Meanwhile, gold prices continue to tread water as markets wait for an update to Fed policy expectations to rekindle directional momentum. This puts July’s US CPI report in focus. The core year-on-year inflation rate is expected to remain unchanged from the prior month at 2.3 percent. An upside surprise may boost Fed rate hike bets, weighing against anti-fiat demand and punishing precious metals. Needless to say, a downbeat print will probably produce the opposite result.