Saudi Arabia Oil Output will grow to record high levels during the next several weeks to meet the growing demand on fuels during summer months. Though there are no serious concerns that growing output can drown markets into crude supplies, according to our sources in petroleum industry.

Our experts say the output can rise to 10.5M barrels/day this summer. Oil supplies were steady in spring, near 10.15M barrels/day.

The forecasts can ease the markets’ concerns regarding an abrupt output boost from Saudi Arabia, which scared markets after the Doha talks failed. On this meeting, OPEC leader, Saudi Arabia, shattered the hopes of the output freeze, saying the progress in this direction is impossible without Iran’s participation. Saudi Prince Mohammed bin Salman warned that the country can ramp up production by 1M barrels the next day and add another 1M in several months, rising it to 12.5 barrels.

Oil futures are rising on the weakening Dollar, WTI futures for June added 0.74% to $46.37, Brent rose by 0.36% to $47.94. Bullish wagers on crude rose by more than 300 000 contracts, according to the CFTC data.

The US Dollar depreciated steeply against other majors, after Wednesday data from the Fed. The USD index dropped by 0.43% to 93.33 (11 months low). European indices also declined, as investors rush into commodities whose returns are growing now. FTSE 100 declined by 0.67%, DAX dropped by 1.38%.

On Thursday, the US Bureau of Economic Analysis reported that GDP growth at a seasonally adjusted rate is 0.5%, confirming the consensus forecast of 0.7%, compared to 1.4% registered in the fourth quarter of 2015. The US economic growth slowed to the lowest level since the first quarter of 2014.

In addition, the US Labour Department reported that the number of initial applications for unemployment benefits for the week ending April 23 increased by 9,000 to a seasonally adjusted 257000. Analysts had expected growth in the number of initial claims for 12,000 to 260,000.

The Bank of Russia kept the pace of anti-inflationary policy, leaving the key rate at 11 percent at a meeting on Friday, but the rhetoric became more dovish, returning the possibility of a gradual decrease in the rate on one of the upcoming board meetings.

Only 2 economists from 26 surveyed by Reuters allowed a rate cut in April by 50 basis points, the remaining predicted its stagnation, remembering the tough anti-inflation rhetoric regulator to a week of silence.

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