Oil Rises as Fragile Global Market Sensitive to Disruptions

September 12, 2018 Share Print 0

Oil prices surged to a 2018 high after the US weekly crude inventory reported showed a larger than expected drawdown. Weather and geopolitical factors also keep crude bid. Hurricane Florence has changed direction and while not a massive threat to oil production, it is now forecasted to cause catastrophic flooding in the Carolinas.

Supply disruptions have boosted oil prices after the Organization of the Petroleum Exporting Countries (OPEC) and other major producers agreed to limit production, and by doing so stabilized prices. Now the looming US sanctions on Iranian exports have already started to support higher crude prices even as the production cut agreement nears its end.

The OPEC cuts its oil demand forecast which could once again put crude no the back foot if the lessons of 2014 are not applied. The Russian energy minister called global oil markets fragile and a sudden ramp up in production could push oil prices off a cliff.

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.