Oil prices hit a one-year high

Oil prices hit a one-year high on Monday after Russian president Vladimir Putin mentioned that Russia was ready to sign on to an OPEC deal to cap production.

A day later prices slipped as the International Energy Agency announced that global oil supplies have increased last month.

Goldman Sachs analysts shared in a Tuesday note:

An agreement to cut production, while increasingly likely, remains premature given the high supply uncertainty in 2017 and would prove self-defeating if it were to target sustainably higher oil prices.”

Julian Jessop, chief global economist at Capital Economics, shared that his team expected oil prices to slip and finish the year back around $45 a barrel before recovering and climbing toward $60 by the end of 2017.

The first point to stress is that the truly seismic shifts in oil prices are now behind us,” he commented. “Recall that prices averaged $100 or more from 2011 until the first half of 2014, before collapsing to the high $20s earlier this year. Prices then recovered to a range of around $40-50 over the summer. The latest OPEC-inspired rally has taken them out of this range, for now at least, but they are still relatively stable compared to the swings that had gone before.

These levels would still be low enough to support consumer spending on other goods and services, while high enough to ease the financial pressures on the most vulnerable producers, including many in emerging markets.”

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