Everything is wrong with it, for the OPEC countries, as well as for Russia. The recent decision of these countries, as well as of the countries that have joined it, to reduce production by 0.5 million barrels per day is almost never taken back by the market. Previously, oil could easily make +20% on such news, but now it is squeakily gaining a couple of dollars by moving upwards.
OIL.WTI Day Chart
And this is despite the fact that the U.S. stock market shows historical highs. What would be on the decline of the market? The main problem is that the OPEC countries can do nothing about the shale revolution, which was not expected, but it came. U.S. and Canadian companies are constantly increasing production, the price is falling, and OPEC is already reducing its production.
But the problem is that American companies are not included in OPEC. And on the decline in production of the latter, they are increasing their production even more. It turns out that Russia and the cartel, step by step, give their market share for the sake of maintaining oil prices. And the U.S. does not face such a problem. As a country and the world’s largest economy, on the contrary, it benefits from further reduction of oil prices.
In such a situation, the time-consuming nature of the situation, when there are simply no moves, is driving the countries whose budget is critically dependent on the export of hydrocarbons.
Euro pair is growing slightly on Monday, but continues to be close to the critical level of resistance, which is the 200-day moving average. The data coming out this week should help to determine. Or the euro confidently breaks through this level and goes up or bounces down, under the pressure of negative interest rates.
As we expected last week, the Fed’s moderate comments launched a New Year’s rally. The shortists are horrified to close their positions, pushing stock markets around the world to new highs. So far, there has been no good reason why the trend could reverse in the coming days.
What awaits us today?
01.30 Minutes of the meeting of the Reserve Bank of Australia
10.30 Unemployment rate in Great Britain in October
20.15 Statement by Mark Carney, Head of the Bank of England
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