All eyes on oil prices

Daily Analysis - 22/06/2018

Markets shift focus to key OPEC meeting


Oil prices have been choppy ahead of the OPEC meeting in Vienna today. There is a lot of uncertainty regarding this meeting and whether OPEC and non-OPEC members will reach an agreement to increase oil production.

Can OPEC strike a deal to increase output?

Oil prices briefly moved higher this morning as markets anticipate a deal out of the meeting in Vienna. The OPEC meeting gets underway today and concludes on Saturday. Some non-OPEC members including Russia will be present as well, which along with Saudi Arabia, is willing to increase production. There have been reports of an increase of 1 million barrels a day. Meanwhile, some oil producing countries such as Iraq, Iran and Venezuela, prefer to keep the supply limits in place. WTI crude has been fluctuating between $65 and $66.50 a barrel in early trading today.


Greece gets debt relief

The euro received a boost after Greece’s euro-area creditors struck a landmark deal to ease repayment terms on some of the nation’s huge debt. This prepares Greece for the end of the bailout program and to give Athens access to markets in August. Greece has been receiving financial assistance since 2010. EURUSD has risen above $1.16.


Sterling jumps after BoE

The British pound moved higher as a result of a surprise MPC (Monetary Policy Committee) vote result that increases the odds of a rate hike in August. The Bank of England left its benchmark interest rate on hold at 0.50% at Thursday’s meeting, as was widely expected. But the minutes of the policy meeting indicated that three MPC members out of six voted in favor of a rate hike, which was more than the expected 2 votes for a hike. This is pound-positive. GBPUSD is currently trading in the high $1.32’s.


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