Iron Ore Extends Gains
With US markets closed for the Thanksgiving holiday, it was a relatively quiet night overnight. The FTSE 100 and DAX 30 both closed virtually unchanged. The second estimate of UK third quarter GDP came in as expected at 0.4%.
Iron ore had another session of solid gains, rising another US$2.52 to US$67.70 per tonne. The rally appears to be fuelled by a rise in Chinese steel prices which are resulting from steel production cuts in China. This is leading to a tightening of inventories indicating that once the production cuts expire, production will have to ramp up again.
Oil has also extended its gains, making a new two-year high overnight and firmly breaching $US58 per barrel. The November 30 meeting of the Organisation of Petroleum Exporting Countries (OPEC) is coming up at which oil traders are hoping for (expecting) an extension to the production cuts that have been instrumental in bringing inventories down from record highs. The fear for OPEC is that US shale output will increase as prices rise and offset any production cut by OPEC.
– No Significant Data
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This article was written by William O’Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via email@example.com or by phoning +612 8302 3633.