Resource stocks rally as oil surges, bonds suffer

Trump rains on oil parade

Reuters reported on Wednesday that top oil exporter Saudi Arabia would be happy to see crude rise to United States dollars 80 or even USD 100 a barrel, which was seen as a sign that Riyadh will seek no changes to an OPEC supply-cutting deal that was introduced in 2017 to boost prices.

Global benchmark Brent crude gained 3.2 percent, reaching $73.91 a barrel - its highest level since November 27, 2014, according to official data.

The price for West Texas Intermediate crude also kept climbing, trading up 41 cents at $68.88 U.S. per barrel.

Commercial crude oil inventories in the U.S. fell by 1.1 million barrels for the week ending April 13, data from the U.S. Energy Information Administration (EIA) showed earlier.

USA unrefined creation has bounced by a quarter since mid-2016, to a record 10.54 million barrels for every day (bpd).

The Organisation of the Petroleum Exporting Countries (OPEC) has not been secret about its desire to boost the price of oil by cutting production.

Also, Saudi Arabia reportedly hinted last month that OPEC would continue coordinating production cuts with non-OPEC members into 2019.

The meeting will play out against a backdrop of falling stockpiles and geopolitical tensions that have lifted prices, which in turn risk encouraging more USA supply. The cartel has used its power to manipulate market prices for oil in the past and actually caused their own present heartache when they dumped cheap oil on the global market trying to drive out competition from USA frackers, among other reasons.

Still, the cartel and Kremlin want to drive prices even higher and offset the U.S. shale oil boom, so they are likely to extend the supply quota plan beyond this year.

Once the Aramco share sale is done, Riyadh would still want higher prices to help fund initiatives such as Vision 2030, an economic reform plan championed by Crown Prince Mohammed bin Salman.

Japan's Nikkei faded late in the day to end up 0.15 per cent, but basic materials and utilities both climbed more than 2 per cent.

Daniel Lacalle, chief economist at Tressis Gestion, told CNBC on Thursday that "oil prices are high because the dollar is low" and warned that "massive supply management" has always been likely to lead to an "artificial" jump in the price of oil.

The Jeddah meeting of the Joint Ministerial Monitoring Committee is unlikely to change the parameters for assessing the deal's success, Mazroui and other OPEC officials said, and sources see little chance of a major tweak in June.

While analysts forecast Brent to rally up to $80 per barrel in the run up to the U.S. strikes against Syrian targets, such a high is likely to remain for a "short period but not be sustained", cautioned Spencer Welch, oil markets director at IHS Markit.

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