Crude
The oil price hovers at 80 USD/bbl level ahead of Thursday’s OPEC meeting. Several comments regarding possible production cuts have emerged over past few days but none of them pointed either to a broader agreement among OPEC members on cutting oil production or to a participation of other non-OPEC producers on lowering global oil supply.
Russia’s energy minister Novak denied previous (anonymous) comments that the country could cut its oil production by about 300 thousand barrels per day (kbpd) and said that Russia has already contributed to stable oil markets by keeping its oil output steady. Meanwhile, anonymous OPEC sources said that if the cartel decided to cut oil production quota that Libya, Iraq and Iran may not participate since their production is seen well below historical levels (and potential levels). Finally, comments of Saudi oil minister Naimi, who said that it wouldn’t be the first time if the market was oversupplied suggest, that the key OPEC players probably still maintain their view.
To sum up, we still do not expect that the OPEC will agree on any production quota cuts on Thursday.
Base Metals
China’s unexpected interest rate cut provided only a short-term lift to copper prices and the three-month contract on copper (LME) fell back below 6700 USD/t yesterday. Let us recall that the latest set of China’s PMI data (flash estimate for November) fell short of expectations and worries about the pace of economic growth (and demand for commodities) therefore persist. Moreover, the fact that China’s property prices fell for a second time in October does not support copper (and base metals prices in general) either.
Chart of the day:
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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