The two oil risks referred to crude of course but the olive oil referred to Italy and the giant though short lived possibility of a coalition of the right and left wing populist parties forming a government. We felt that that could not last a week. It did not last for a moment. New elections are likely soon. The Milan index had plenty of volatility to earn tidy profits last week and it is providing them into this week too. The Crude oil market is weakening and quickly. OPEC which meets on June 19th at its headquarters in Vienna and it will surely have the production quota on the agenda. It has already announced that it is likely to raise that quota to compensate for future missing Iranian and Venezuelan output. The crude price reflects this. But it reflects more than that. If the quota was raised to compensate for lost production, then the net output would be unchanged and price would not fall as it did. What the market understands is that the 2016 OPEC agreement itself is in jeopardy. A disintegration of that agreement will likely bring excessive amounts of crude onto the market and the price will fall. Current price reflects just that.
Oil and the Smoldering Trade Dispute
Weekly Report - 28/05/2018