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L? OPEP to the rescue?
US oil has been sold heavily recently due to growing concerns about global growth. President Trump has announced tariffs on both the United States and Mexico. The danger of waging a war on two fronts is obvious and the impact could be considerable if all the threatened tariffs were put in place. Yen bids reached their highest level in two years on Friday on a trade-weighted basis. US 10-year Treasury yields have fallen to their lowest level in 20 months, as the market is worried about the situation and is moving towards safe havens.
However, this deterioration in the oil market could prompt OPEC to act and extend its cuts. OPEC Secretary-General Mohammed Barkindo said that OPEC will take into account the current "economic softness" at its meeting in the coming weeks. Mr Barkindo said that OPEC is committed to maintaining the balance of oil markets beyond this year and beyond. The OPEC cuts have actually worked and the Saudi budget needs a Brent of $ 80.
Breakdowns in Iran, Russia and Venezuela are offset by American shale oil. In recent times, Russia does not like the OPEC cuts too much, considering itself as "conceding the oil market" to US producers, which never goes well in Moscow ;-), but when oil falls, it may incite Russia to act in unison. Saudi.
Here are some rough scenarios for oil:
- Trade agreements between the United States and China (and now Mexico)
- Trade wars intensify – oil falls on the weakening of demand and the worry of global growth
- The status quo is maintained – the OPEC meets and introduces cuts led by Saudi Arabia. Oil finds support
- A combination of points 2 and 3 – The worldly petrol, related to the beach, between the two stories
ForexLive
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