Less than a month after OPEC announced a plan to collectively reduce oil production to boost prices, it appears that the deal may be falling apart. Originally, all 14 member nations and Russia had agreed to work together to reduce production, but now nations are asking for exemptions from the pact. Iraq, Nigeria, Iran, and Libya have all suggested that they should be able to produce at current levels while the other nations cut back, which could lead to squabbling amongst member nations.
Markets are now believing that the deal will ultimately fall apart, which would continue the global oil glut. These expectations knocked oil prices near the lowest price of the month, trading Friday for $49 per barrel.
Soggy Oats Market Boils Higher
Oat prices have exploded this week, gaining over 10% in just three days on concerns about the quality and availability of Canada’s crop.
Canada is the world’s largest exporter of the grain, but cold, wet weather in the Canadian province of Saskatchewan has essentially halted harvest. A quarter of the crop still in the field, and some fear that it may not be harvested until next spring.
Furthermore, wet conditions are hurting the quality of the oats, which could render them unsuitable for human consumption. Fears of limited supplies boosted prices to a three-month high at $2.40 on Friday.
While sometimes ignored by traders, oats are thought to be a harbinger of future moves in the corn market by the old adage “corn follows oats.” Should that prove true again this year, a rally in corn would be a welcome relief to U.S. farmers who are finishing this year’s harvest.
Strong Economy Bolsters Copper
The U.S. economy is growing at a rate of 2.9%, the highest figure in two years, according to the U.S. government’s third quarter estimate on Friday. This sign of strength helped cement copper’s 10 cent gain this week, trading Friday near $2.20 per pound.
Copper is an essential component in cars, houses, and electronics, making it extremely sensitive to economic growth. Globally, inventories of copper are shrinking, especially in China, a further sign of demand for the red metal.
For consumers, this week’s price rally shouldn’t be a major concern. Even after the rise, copper prices are still less than half of their 2011 peak over $4.60 per pound.