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  
FOMC expect to reach neutral policy

The FOMC minutes highlighted some increased risks to the US economy particularly concerning trade relationships but the view still holds that the Fed should...

US FOMC expected to raise rates again

UK Consumer Price Index (YoY) (May) is expected out at 2.5% against 2.4% previously. Producer Price Index – Input (YoY) (May) is expected...

PMI expected to weaken further

UK Construction PMI (May) will be out with an expected headline number of 49.7 from a prior number of 52.5. The consensus is for a drop in the numbers...


BOE Expected to Keep Rates at 0.5%

UK Industrial Production (YoY) (Mar) is expected to be 3.1% against a previous 2.2%. Industrial Production (MoM) (Feb) is expected to be 0.2% against...

Consumer Price Index Takes Centre Stage

UK Budget Report will be released. This is a mini-budget and outlines the government’s updated budget for the fiscal year, including infrastructure...

US earnings hit sweet spot for markets

The US Nonfarm Payrolls data released on Friday showed a strong increase in job creation and, combined with the lower than expected increase...


Bank of Japan interest rate decision

The Bank of Japan Interest Rate Decision was as expected and left unchanged at -0.1%. The Japanese 10-Year JGB yield target is around zero percent...

Oil Gains and GBP Stumbles

On Tuesday, the American Petroleum Institute said crude stocks in the United States fell by 7.4 million barrels last week. That is almost twice...

Geo-Politics will be the focus of the week

This week will be dominated by Geo-Politics as the US Tax Bill needs to be reconciled between the Senate and House, whilst UK Prime Minister...

  


Share: