Crude Rallies as Saudis Promise Deeper Cuts

Saudi Oil Minister Khalid al-Falih indicated that Saudi Arabia was preparing to cut production below the key psychological level of 10.000 million barrels per day, helping to drive Brent and WTI futures to the highest points in over a year.  Following the announcement that non-OPEC countries would join OPEC in reducing production by approximately 558,000 barrels per day starting in 2017, there are growing indications that prices may have finally found a floor.  If the parties are able to stick to the agreement and not defect by producing more during a period of higher prices, the moves may lead to a significant rebalancing of the energy market.  Countries that plan to partake in the newly announced deal include Russia, Mexico, Oman, Azerbaijan, and even Kazakhstan.  In the meantime, WTI futures for January delivery have pushed above $54.00 per barrel.

For the first time since 2009, the Turkish economy has contracted, with gross domestic product shrinking by -1.80% during the third quarter compared to a year earlier.  Much of the losses were associated with falling consumer spending and an ongoing trade deficit.  Even with the Turkish Lira continuing to tumble against peers, exports fell by -7.00% during the quarter whereas imports grew by 4.30% during the same period, exacerbating the deficit.  While rising government spending was able to rescue the GDP figure from an even deeper plummet, business activity in the country continues to fade with both services and industrial activity declining.  Considering the most recent spate of terrorist attacks, it is unlikely that tourism will be able to rescue the economy either.  After reaching a record high earlier in the month, USDTRY is once again on the rise, closing in on all-time highs.