Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Crude Oil climbs on hopes of a deal among producers

Published 2016-09-06, 12:14 p/m
USD/CAD
-
UK100
-
DE40
-
RTX
-
LCO
-
CL
-
BBDb
-

North American traders return from a long weekend today to find the biggest action they missed to start the week has been in crude oil where WTI and Brent have been active up 1.0% and down 0.7% today respectively. The biggest news to come out of the G20 summit last weekend was that Saudi Arabia and Russia have agreed to greater co-operation between them.

What that actually means remains to be seen but oil traders have taken it as a sign of hope some progress could be made toward greater co-operation among producers at the big Algeria conference later this month or the next OPEC meeting later this year. Iran, where production reportedly has returned to pre-sanctions levels, apparently has indicated this morning that it could back a production freeze and that it is looking for oil to stabilize in the $50-60 range (to me $40-60 looks more realistic between seasonal swings and the potential a price above $50 could bring some US production back on stream).

Stock markets are mixed today waiting to see how US traders respond to weekend events and if there’s any follow though reaction to Friday’s nonfarm payrolls report. US index futures are pretty much flat European indices are slightly split with the FTSE down 0.2% and the Dax up 0.2%.

Over the weekend, Richmond Fed President Lacker indicated he thinks interest rates should be significantly higher and that the current natural rate is about 1.5%. He also noted that while job creation has been running at about 180K per month down from about 230K last year, this is still double the breakeven level. While he is not a voter this year, these comments indicate Fed hawks are not wavering following Friday’s job report and that there’s still a chance of a September rate hike.

USD/CAD is picking up ahead of tomorrow’s Bank of Canada decision on a number of factors. As usual the loonie is benefitting from a rebound in the oil price. Also, The Reserve Bank of Australia held rates steady at Governor Stevens’ final meeting taking away outside pressure to do something dovish. AUD is up overnight on the RBA news. The Bank of Canada looks unlikely to make a move anyway until it can properly assess the damage done by last spring’s Fort McMurray wildfire but other resource producing countries had been cutting rates this summer. This all suggests the Bank of Canada is likely to remain on hold this meeting although a rate cut remains possible if the expected summer rebound doesn’t materialize. The statement may give a better idea of how things are heading.

Bombardier (TO:BBDb) could come under some pressure this morning after the company was forced to cut deliveries of its CSeries aircraft to 7 from 15 for this year due to difficulties at its engine supplier Pratt and Whitney (part of United Technologies (NYSE:UTX)) in ramping up production. Aircraft revenues for this year are now expected to come in at the low end of its guidance range of $16.5-$17.5B. Apparently the CSeries aircraft in commercial operation have been performing well and the company still expects to reach production of 90-120 aircraft per year by 2020.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.