OPEC to Keep Pumping

Weekly Report - 25/06/2018

Modest Increase in Oil Production


All eyes were on the OPEC meeting in Vienna towards the end of last week. Oil rallied on Friday after OPEC agreed to an unexpectedly modest increase in production from next month after Saudi Arabia persuaded Iran to cooperate.

Week that was

After many hours of meetings, OPEC finally reached a deal that allows for higher production, basically giving Saudi Arabia and Russia what they wanted. This was a much expected outcome and Saturday’s OPEC+ press conference provided more clarity on the decision to increase production, with guidance for a full 1 million bpd ramp-up in the second half of this year.  WTI crude oil rose above $68 a barrel on the news. Other news over the weekend focused on the elections in Turley, where Recep Tayyip Erdogan claimed victory as was widely expected. He is now modern Turkey’s longest-serving ruler. The Turkish lira rallied as Erdogan’s win removed some political uncertainty. It strengthened 3 percent against the dollar.


Main Focus This Week

It was a quiet start to the week in terms of economic data. The major movers were the JPY pairs, as the yen strengthened on a risk-off environment, partly due to trade war concerns. U.S. President Trump was back tweeting on the weekend and threatened tariffs on European cars this time. Shares of Volkswagen AG, Daimler AG and BMW AG fell in Frankfurt. Trump’s latest threats escalate a trade war that he has already started with China. The overriding theme will likely be trade concerns. Meanwhile, in terms of data points, U.S. GDP will be in focus on Thursday.


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