The week ahead is likely to turn busy with the focus shifting back to the economic and monetary policies. Coming up this week, the key events include the OPEC meeting in Vienna, where the question is whether OPEC members will extend production cuts.
In the US the FOMC meeting minutes from the May FOMC meeting will be released. The minutes could revive the rate hike odds which has been slipping steadily since the May 3rd FOMC meeting.
The Bank of Canada’s interest rate decision is due this week, but no major changes are expected. Besides these key events, the UK’s inflation report hearings, Germany’s Ifo business climate and the GDP revisions from the US and the UK are lined up over the week.
OPEC Meeting in Vienna – Saudi & Russia could formalize production cuts
On May 25th, the Organization of Petroleum Exporting Countries will be holding the 172nd OPEC meeting at OPEC headquarters in Vienna. The outcome of the meeting will be crucial for the oil markets as a decision to extend the oil production cuts could be extended.
Following the decision to cut oil production last year, despite some setbacks Saudi Arabia had to take a majority cut in oil production. This came as the nation and OPEC had to make up for the exemptions which included countries such as Libya and Nigeria.
WTI Crude Oil: 50.86
The oil production cut has led to nearly 10% gain in prices since November last year. As of April, oil output from the 13-nation OPEC fell to 31.73 million barrels per day (bpd) which was down 18,000 bdp from March’s production.
So far, the narrative has been that Russia and Saudi Arabia have agreed to extend the production cuts until March 2018. However, a formal announcement on this is yet to be made, which is expected to happen at this week’s OPEC meeting.
However, the major issue has been that with oil prices rising, non-OPEC supply, more importantly from the U.S. shale industry has been edging higher. According to OPEC, non-OPEC supply growth is expected to rise to 0.95 million bpd, compared to 0.58 million bpd for 2017.
