In recent macro commentary ending last week we warned before the weekend meeting of OPEC in Vienna, which could lead to draw gap on the charts of black gold. This situation actually took place, both Brent and WTI clearly gained, moving to the highest levels since July last year. All through the first global pact signed in the oil market since 2001.
Calm Monday calendar – what to look for?
Regarding Monday’s economic data calendar December 12 is quite empty – polish traders will pay attention only to the results of the November consumer inflation in Poland (the results for the previous month to 0.5% mom and -0.2% yoy).
The next two days are also without any more interesting publications so markets will be fully focused on Wednesday’s conclusion of the FOMC meeting, which is scheduled for 20:00 . Half an hour later will start press conference with Janet Yellen.
558,000 barrels less every day
OPEC meeting with non-aligned countries in the organization had to convince the latter to join the cartel and as it decided also to restrict production. Finally, production is to be reduced by 558,000 barrels per day, which is a huge addition to the 1.2 million barrels – to the amount previously agreed within OPEC. We talk here about 3% of world supply.
According to Aleksander Nowak it is a “truly historic event. For the first time so many oil producing countries from around the world gathered in one room and reached a very important agreement “
As the result of earlier announcements, the Russians took over the majority of the latest cuts and they have to reduce its production by 300,000 barrels. Reducing production also promised 10 other countries, including Oman, Azerbaijan and Sudan. As we would expect on quotes of oil it caused great enthusiasm. The session on Dec.12 opened with a bullish gap testing the 54.50 level – in effect, WTI is on highest level recorded since July 2015:
In the case of brent situation is very similar:
As a result of the strengthening of oil, the Canadian dollar gained. USD/CAD opened with a bearish gap starting 8 session of declines of popular loonie in a row. If the correction should further expand it will be necessary to overcome the trend line connecting the lows of this year.