CBOE Crude Oil Volatility Index hits highest since April as OPEC meeting draws closer

Crude oil prices continue to be driven by headlines as we get closer to OPEC's November 30 meeting draws closer. The CFTC report showed that wagers on higher and lower prices held by speculators and hedgers reached 1.47 million contracts in the week ended Nov. 15, the most since 2007. The CBOE Crude Oil Volatility Index reached the highest since April.

Optimism seen rising among traders on expectations that the OPEC cartel will manage to clinch a deal to reduce production. OPEC agreed in September to reduce output to help draw down a global supply glut that is weighing on oil prices. However reaching an agreement on the terms of such a deal has proved tricky as some producers, most notably Iran, have been reluctant to cut output.

Iraq has also been ramping up its oil production for more than two years. Iraq’s Oil Minister Jabbar al-Luaibi has said Iraq should be exempted from cutting production because it needs the revenues to prosecute a costly war against Islamic State. But Friday, Mr. Luaibi said he is optimistic that OPEC will reach an agreement at the Nov. 30 meeting. His comments were followed by similarly positive comments from Iran, thus lending support to further optimism.

OPEC is holding a so-called “technical meeting” at their Vienna headquarters Monday and Tuesday to discuss the mechanism for implementing the September agreement. The technical meeting will prepare for OPEC’s ministerial meeting Nov. 30 in Vienna. Iraq will offer three new proposals at a meeting, Luaibi said late Sunday, in the latest sign the country is inching closer to resolving its differences with the cartel.

Russian President Vladimir Putin said on Sunday that he sees no obstacles to OPEC reaching an agreement later this month, and Russia is willing to freeze its crude oil output at current levels.

“Whether an agreement will be reached, I cannot say for one hundred percent, but there is a strong likelihood that it will be achieved,” Putin told reporters on Sunday after he attended the Asia-Pacific Economic Cooperation summit in Lima.

FxWirePro's Hourly USD Spot Index was at 38.1666 (Neutral) at 1220 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex