Are major oil producers able to freeze the output?

September 15, 2016

The August figures on the UK labour market were released on Wednesday and they did not contain any anomalies which could refer to the Brexit fallout. But it did not portray any signs of optimism either. В Jobless claims grew 2.4K in August, which is 0.6K higher than projected whereas in July they reduced to 3.6K.

The unemployment rate remained unchangedВ at 4.9% in July (3-month change) while the wages grew by 2.3%, which was 0.2% faster than estimated. Sterling saw a muted response to the employment figures, the GBP/USD pair sways in the vicinities of a 1.32 level, after dipping to the 1.3175 support in the Asian session. As it was purely driven by the demand for US currency.

The Greenback index is nearly flat on a 95.50В level, seeking for a growth & drop catalysts, although with little success. The slightly upbeat Monthly Budget Statement failed to provide a substantial impact to the Dollar. The MBA’s Mortgage Applications change is likely to be passed unnoticed, although Advance Retail Sales is due tomorrow and surely will stoke someВ volatility on the US currency, adding fuel to the speculations of the FOMC September decision. The headline reading is projected at 0.2%.

The European equities rebound, halting weekly declines, the DAX rose by 0.42% led by pharmaceutical firms, FTSE 100 gains 0.61% with mining and commodity producers as the leaders of the growth.

CrudeВ Oil prices erase early gainsВ fueled by the mixed API report, which showed that crude oil inventories rose by 1.4M barrels, while gasoline supplies shrank 2.4M barrels and distillates rose 5.3M in the week ending on September 9th. WTI trades are atВ $44.83 (-0.16%) while Brent fell by 0.17% to $47.02. Traders are second-guessing if major oil producers are able to agree on freezing the production to support the market. The meeting will be held later this month.

The OPEC members will discuss potential output cap during aВ course of informal meetings, which are held on the side of the International Energy Conference in Algiers on 26-28 September.

But many market participants doubt that the forthcoming meeting in late September will result in any steps to kerb the production.В Most of them believe that instead oil producers will continue to monitor the market, postponing the negotiations of freezing before the official meeting of OPEC in Vienna, scheduled for 30 November.

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