Oil prices slightly changed on Monday, holding gains of the previous week at multi-month peaks thanks to buoyant rhetorics of OPEC officials, saying the market is moving towards eliminating supply surplus.
The Minister of Petroleum Industry of Kuwait said at a meeting in Vienna dedicated to the monitoring of OPEC production that production cuts helped to pare down inventories to the five-year average, tallying with OPEC projection. Also, according to him, production in Nigeria remains below the proposed quota.
Investors are actively discussing the fate of OPEC deal, which expires in March 2018. Some ministers supported its extension, and the decision could be made already this year. The Minister of Energy of Russia, a country which is not part of the cartel, said that he did not expect negotiations on the deal before January 2018.
Despite OPEC’s active efforts, prices are cautiously creeping up, as the market prefers to get reliable evidence that US shale output won’t provide a lively response in a surge of output. The Baker Hughes report showed rig count fell for the third week in a row, but it remains unclear how the shale companies lost their balance after the recent Oil refinery shock.
The Oil market is trading moderately in negative territory due to the recovery of the dollar.
Elections in Germany
The Euro yielded reins to the greenback on Monday, as rising support for the ultra-right in weekend elections makes it harder to retain control over the parliament for Chancellor Angela Merkel. Fractured parliament means more concessions for ruling party when forming a coalition what puts a layer of uncertainty on some policy issues, particularly on immigration. The EUR/USD fell from 1.20 to 1.19, the Euro index lost 0.19%.
The assessment of the economic situation in Japan, published in a government note on Monday, was conditionally positive. With a moderate increase in household expenditure, exports and the labour market, inflationary mechanisms in the economy remain intact. Economists predict a further expansion of the economy but without noticeable growth of inflationary pressure against which the Bank of Japan looks completely helpless. A Recent decision by the regulator to leave policy unchanged indicated that lagging behind the rest of the counterparts in normalizing rates is the foundation for further weakening of the Yen, in particular against the Euro.
Elections in New Zealand.
The New Zealand Dollar received a blow after the weekend voting, as the national party could not secure unequivocal superiority despite the victory. Creation of a ruling coalition will probably take more time, which negatively affects NZD as a factor of uncertainty. The NZD fell 0.68% to the level of 0.7291.
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