Oil poised for third weekly gain following surprise OPEC+ production cuts

Yahoo Finance Live’s Jared Blikre breaks down how oil and other commodities are moving on Thursday and the outlook for the energy sector.

Video transcript

BRAD SMITH: Oil prices are on track for a third week of gains in the wake of OPEC's shock production cut on Sunday. Energy markets moved higher on the announcement, but a drop in US oil inventories is now leading to a broader concern about, quote, "critically low oil supplies." For more on this week in the commodities markets, let's check in with Jared over at the YFi Interactive. Jared.

JARED BLIKRE: Yes. Well, as it turns out, crude oil just about breakeven for this short week here. Here's what it's done today. And let me just-- let me just give a year to date look. And we can see there was a big pickup here and some volatility recently. This has to do with the OPEC+ decision that came over the weekend. A bit of a surprise that they're cutting production by a million barrels per day.

And this had ripples throughout the energy universe here. Now, in terms of crude, all right, it's flat-- or basically up 4 and 1/2% for the year to date. But in the context, it is still relatively up in the upper, I would say, range, historically going back to the beginning of the pandemic. And right now, it is punch above 80. So could be that that false-- that breakdown below the $75 price level was a false breakdown.

But really, what's gotten a lot of headlines this week is a strength in not only gold, but also silver, and on that measure, let me show you what's going on with silver here, kind of a little jump to the upside. And silver really got going-- silver and gold really got going a few months ago. And that would be back in here. And that had to do with the changing dynamic in the Fed's calculus and also in the bond market in the US. And as we're seeing real yields retreat back down, especially with respect to that banking panic, we saw movement into gold. And here's GC. Here's gold. You can see it's up 20% over the last three years. This year alone, it is now up almost 10%. Pretty big movement for gold.

And just a reminder, as gold moves higher, its volatility tends to increase, and that's the opposite of stocks. So it's right on the doorstep of record highs. I think that record high was just short of 2,100 a couple of years ago. And we'll have to see what comes of this. Elsewhere in the news and commodities, we did see some various grain contracts flag. We're seeing corn down 5 and 1/2%, soybeans down 4%. But overall, pretty interesting to see these dynamics play out. And of course, when we talk energy, we're talking gas prices as well. So we're going to be monitoring the situation going forward, Brad.