OPEC

The Daily Update - No Brexit just NOPEC

The Daily Update - No Brexit just NOPEC

With Brent trading up at 67.71 a barrel of crude, almost a 26% rally from year-end, OPEC+ it would appear have decided to cancel their meeting set for April. This means any further supply curbs will now be delayed until their next scheduled meeting in June.

At the heart of the delay is rumoured to be the Russian and Saudi relationship, the two most powerful members of the 24 nation coalition.

The Daily Update - Landmark meeting between Russia and Saudi Arabia

In what is the first state visit to Russia by a Saudi ruler, King Salman bin Abdulaziz today will meet Vladimir Putin to discuss oil markets, investment deals, the Syrian war and to deepen the nascent friendship between the two largest oil producers in the world. The delegations are tabling $3bn worth of energy deals with the possibility of a collective $1bn energy investment fund and a $1bn Sibur plant in Saudi Arabia; there’s talk of Gazprom Neft and Saudi Aramco establishing joint research projects; and interminable rhetoric on the “promising areas for bilateral co-operation.”

The Daily - OPEC 172 and GCC

Yesterday, at the 172nd OPEC meeting in Vienna, OPEC and some key non-OPEC countries announced the extension of production cuts for 9 months through to 31 March 2018.  The earlier agreement had looked for a 1.8 mb/d reduction in production.  Khalid Al-Falih, the Saudi Energy Minister, noted that oil inventories are expected to fall below five-year averages before the end of the year but as Q1 is seasonally weak it made sense to push the cuts out until the end of March. Little was said in terms of an exit strategy other than the situation will be reviewed at the end of November and into 2018.  Brent crude sold off on the back of this news trading around USD51.75 per barrel the time of writing but oil had rallied strongly ahead of the meeting already factoring in a lot of upside and the announcement did not exceed expectations.

The Daily Update - Oil OPEC Fed

The big news at the weekend that Theresa May owns a £995 pair of leather trousers was overshadowed by news from OPEC. Saudi Arabia announced agreement for production cuts starting January with oil minister Khalid Al-Falih reporting that Saudi will ‘cut substantially to be below’ the target agreed last month. Brent rose to hit $57.89 up 6.4% in early trading and is now up around 20% from November when the agreement was first announced.

The Daily Update - OPEC oil shale

OPEC yesterday agreed to their first production cut in eight years with members on paper at least agreeing to a cut of 1.2million barrels a day. Headlines such as ‘OPEC resurrection’ ‘OPEC are back’ and ‘OPEC in the driving seat’ combined with a near 10% bounce in the price of Brent, welcome the news that OPEC and Russia are working together and Saudi and Iran are in agreement.

With the Standard and Poor’s Energy Sector Index up 5% yesterday and expectations from OPEC that crude will be trading around $60 at year end the celebrations in the industry look to continue for the coming period. However, the agreement depends on self-compliance of all the countries involved to keep to targets and there remains problems as to how to measure production and so this agreement will be extremely difficult to police.

Wealthy Nations Daily Update - IMF G20

The International Monetary Fund (IMF) has again warned governments around the world that they cannot rely on low or negative interest rates alone to avert recession and drive growth. Sighting factors such as low productivity, the lack of firepower from monetary policy and persistently low inflation the IMF is worried that there are still a number of factors that could blow global growth off course. Also, in a statement from the G20 there was a grave warning, “Growth remains modest and uneven, and downside risks and uncertainties to the global outlook persist against the backdrop of continued financial volatility, challenges faced by commodity exporters and low inflation.”

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