Market reaction to OPEC production offer extends into third day against a backdrop of more supplies coming to an economic showing only modest signs of growth. File photo by Monika Graff/UPI |
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NEW YORK, Sept. 30 (UPI) -- Crude oil prices started Friday in a weak rally as market sentiments offset analyst expectations about production talks that sparked a surge earlier this week.
Oil prices surged nearly 6 percent late Wednesday and carried over to gains of nearly 2 percent in Thursday trading as the market reacted to a decision from the Organization of Petroleum Exporting Countries to move toward enacting a production cap later this year. Most analysts discounted the move as verbal intervention bolstering OPEC's influence more than an actual market adjustment.
Brokerage firm PVM in a report Friday said prices may be reacting to competing trends as Russia revisits its role in the OPEC production cuts at the same time that Libyan companies expect to add more crude oil to the market.
The price for Brent crude oil moved up by 0.5 percent to start the day at $50.04 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, gained 0.6 percent to $48.12 per barrel.
If the rally holds, it would mark the first time since early June that Brent closed above the $50 mark. At the time, U.S. Federal Reserve Chair Janet Yellen said many of the concerns about the low price of oil in early 2016 are in the rear-view mirror as many of the spillover effects of a weak energy market improve.
Data may be influenced later in the day by rig data from Baker Hughes. The reaction may be fluid as an increase in drilling activity would indicate a return of sector confidence, but also signal a coming increase in supplies as companies capitalize on the increase in crude oil prices.
On the economic front, markets are still reacting to lingering risk concerns from troubled Deutsche Bank, which may be on the brink of a major catastrophe following a U.S. Justice Department investigation into mortgage securities.
Elsewhere in Europe, a flash estimate on inflation this month found it doubled from August levels in the countries that use the euro currency to 0.4 percent. Seasonally-adjusted unemployment, meanwhile, was relatively stable for Europe, but still at its lowest rate since July 2011.
In the United States, the Commerce Department reported an increase in personal income for August, but found little change in spending. On Thursday, the government revised its estimate of the expansion in gross domestic product, but stressed the overall picture for the U.S. economy remained the same.
