Markets Look to OPEC

8 August, 2017

As OPEC began its 2-day meeting in Abu Dhabi on Monday, to align its members to adherence to output reductions, data from S & P Platts revealed that Libya and Nigeria pushed OPEC’s crude oil output in July to the highest level this year at 32.82 million barrels a day. Per Platts; Libya and Nigeria (both exempt from the cuts agreed last year) oil production went up 210K barrels per day in July, 210K bpd and 1.81 million bpd respectively. If the data from Platts is correct then OPEC’s output in July was 920K bpd above the ceiling of 31.9 million bpd OPEC set last year. It is evident that compliance with the cuts is not being made, thus leading to an oversupply that has kept WTI below $50. The markets will be waiting to see if OPEC makes further demands of its members to reduce production and, more importantly, that its members abide by such demands.

In currencies, USD edged lower on Monday, giving back some of its gains from Friday, as the markets became cautious ahead of inflation data this week that may signal a reversal in USD weakness. Finally, the latest economic data out of China pointed to steady global demand. While exports missed market estimates, rising 11.2% in July in yuan terms, demand for Chinese goods held up in the face of escalating tensions with the US.

EURUSD trading was relatively light on Monday, trading in a narrow 43.7 pip range as it made some gains from Fridays sell-off. Currently, EURUSD is trading around 1.1805.

USDJPY was also trading in a narrow range of less than 28 pips on Monday. Currently, USDJPYis trading around 110.60.

GBPUSD appears to have found some support just above 1.30 on Monday in relatively light trading. Currently, GBPUSD is trading around 1.3045.

Gold edged lower on Monday, failing to gain support from a weaker USD, as the markets digested sharp losses in the previous session and worried about further U.S. rate hikes. Currently, Gold is trading around $1,260.00.

WTI lost 1.2% on the day, as Oil failed to recover from recent USD strength. WTI currently trades around $49.40pb.

Economic data releases on Tuesday are, somewhat, second tier – with little expected impact on the markets.

Day 2 of the OPEC meeting in Abu Dhabi ends. The main focus being members’ compliance to the output pact the cartel inked with 10 other oil suppliers, including Russia, in late 2016. The deal so far has not produced meaningful effects to reduce global output or inventories.

Source link  
New Chinese stimulus promises

China continues to struggle for economic growth, as it aims to resist the effect of trade disputes with the U.S. The editor of an influential...

Best currency rally heading for a crash

The analyst who most accurately predicted the ruble's rally in the second quarter is now its most pessimistic forecaster. The Bank of Russia's switch to...

Trade truce 2.0, or new currency wars?

Tensions around trade wars subsided following news reports that both the US and China leaders are set to hold an extended meeting...

Experts predict where crude could go

A top military aide to Iran's supreme leader warned over the weekend that The first bullet fired in the Persian Gulf will push oil prices above...

Morgan Stanley sees global recession

Investors are overlooking the threat posed by the U.S.-China trade war, which could send the global economy into recession in less than a year...

Oil at $100: how will it affect economy?

Brent crude has risen about 33 percent this year and is close to the highest in six months. While higher prices due to strong demand typically reflects...

Oil sector will lose 95% by 2050

Companies in the oil and gas sector, including large groups such as Shell, BP and Exxon, could lose 95% of their value by 2050 if governments...

The US economy recession by 2021

In a recent survey, most business economists believe the U.S. will fall into recession by 2021. Days after the market euphoria over a ceasefire in the...

Fed plans some further hikes

The U.S. Federal Reserve raised interest rates on Wednesday, as expected, but forecast fewer rate hikes next year and signaled its tightening cycle is nearing...


Share it on:   or