Oil Rises As Saudi Arabia And Russia Agree To Extend Production Cuts, ASX Futures +17

Oil prices jumped on Monday as both Saudi Arabian and Russian officials stated that they had agreed to extend production cuts for nine months through until March 2018 to help rebalance a supply glut. The first chart below shows the reaction in oil, with both WTI & Brent crude gaining +2.11% & +1.93% respectively, with the previous consensus being that production cuts would be extended for six months. So far the rhetoric from OPEC officials has succeeded in pushing prices higher, at least in the near-term with prices up over 11% since the May 5th lows. However the pressure is now on officials to deliver on these pledges at a meeting of oil producing nations on May 25th.

Any agreement will undoubtedly be positive for prices, however as we have seen over the past six months, rising U.S. production and record inventories have kept upside limited and a nine month extension at this stage is unlikely to break that.

In the U.S. the S&P500 closed at a new all-time high to break above the 2,400 level to close at 2,402.32 or up +0.48% for the session with broad based buying as 407 out of the 505 securities that comprises the index advancing. The Nasdaq100 also closed at a new all-time high of 5,704.48 or up +0.31% while the U.S. dollar index fell -0.38%.

In Europe the Euro gained +0.41% as French President Emmanuel Macron appointed Edouard Philippe as Prime Minister. Philippe is a moderate from the Republican Party who is seen as further strengthening Macrons position ahead of the June 11th legislative elections as Macron seeks to bridge the divide between the left and right in France. Also supporting the Euro was a separate meeting with German Chancellor Angela Merkel on Monday, where Macron and Merkel agree to draw up a plan for furthering the European Union integration and strengthening the EU position ahead of key Brexit negotiations.

Locally the ASX200 reversed initial declines to close modestly in positive territory, up +0.03% and this morning we can expect to take a positive lead from Wall St. overnight with ASX SPI200 futures up +17 points or +0.29% in overnight trading. If you’re interested in trading global markets and still need practice, click here to open a free $100,000 Rivkin Trader account. 

Data releases:

·         Reserve Bank of Australia Minutes 11:30am AEDT

·         BOJ Governor Kuroda Speaks 2:55pm AEDT

·         U.K. Consumer Price Index (MoM & YoY Apr) 6:30pm AEDT

·         Euro-zone GDP (QoQ & YoY Q1) 7:00pm AEDT

·         Euro-zone ZEW Economic Sentiment Survey (MoM May) 7:00pm AEDT

Chart 1 - Brent (Blue) & WTI (Purple) Crude Oil

CSource: Rivkin, RivkinTrader

To view the Rivkin economic calendar and Local Markets matrix, members can click here.

This article was written by James Woods - Global Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via james.woods@rivkin.com.au or by phoning +612 8302 3631.

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice, securities and derivatives dealing services and accounting administration services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.