The price of a barrel of Brent Crude oil rose by more than 5.5% yesterday to top $40 a barrel for the first time this year while iron ore prices soared by more than 20% to $62.60 a tonne yesterday, a record one-day increase.
However, the surge in oil prices was short lived, crude oil was back at $37.50 per barrel by 7:00am today - a drop of 1.19%. If this trend continues it will soon wipe out the gains made yesterday.
Until this morning, crude oil prices had risen by 50% since January and seemed to be supported at these higher levels by the still questioned agreement by large oil producers such as Saudi Arabia and Russia to freeze production at current levels, and by evidence that prices closer to $30 per barrel were beginning to reduce production of US shale oil supplies.
The relative surge in iron ore prices was triggered by reports from the annual meeting of China’s legislature at the weekend that the government there would take additional steps to stimulate the economy there while also addressing overcapacity in the country’s vast steel and coal sectors.
