© Reuters. FILE PHOTO: An oil and gas drilling platform stands offshore near Dauphin Island, Alabama, October 5, 2013. REUTERS/Steve Nesius/File Photo
By Wayne Cole
SYDNEY (Reuters) – Oil prices surged on Monday after Saudi Arabia and other OPEC+ oil producers announced a surprise round of output cuts, a potentially ominous sign for global inflation just days after a slowdown in U.S. price data had boosted market optimism.
jumped almost $6 to $85.54 a barrel in hectic early trade on news output would be cut by around 1.16 million barrels per day, while climbed $5.22 to $80.89. [O/R]
Sunday’s development comes a day before a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia, and which had been expected to stick to 2 million bpd of cuts already in place until the end of 2023.
The latest reductions could lift oil prices by $10 per barrel, the head of investment firm Pickering Energy Partners said on Sunday.
Goldman Sachs (NYSE:) lifted its forecast for Brent to $95 a barrel by the end of the year and to $100 for 2024.
The surge in energy costs somewhat overshadowed Friday’s slower reading for core U.S. inflation which had seen Wall Street end the month on a strong note. [.N]
dipped 0.3% early Monday, while Nasdaq futures lost 0.4%.
futures were still pointing to opening gains, though they were off their highs.
Treasury futures slipped, while Fed fund futures pared back expectations for rate cuts later in the year.
The market nudged up the chance of the Federal Reserve hiking rates by a quarter point in May to 57%, from 48% on Friday.
That in turn helped the dollar gain 0.3% on the Japanese yen to 133.21, while the euro eased to $1.0817.
The rise in oil prices is bad news for Japan’s trade balance given it imports most of its energy.
The rise in the dollar and yields nudged gold prices down 0.25% to $1,963 an ounce. [GOL/]
