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Oil Surges As Saudi Arabia & Russia Extend Production Cuts
Crude prices broke out to yet further new highs for the year yesterday. The move was driven by news that Saudi Arabia and Russia have extended their additional production cuts through year-end. On top of the production cuts agreed among OPEC+ members, the two producers undertook additional, voluntary cuts which totalled around 1.5% of daily global supply. The cuts, which were initially extended through October have now been extended further and reflect the two producers’ commitment to underpinning prices. Coming on the back of a string of recent, large US inventories drawdowns, this action is expected to help ... (full story)
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The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening. Inflation in advanced economies has continued to come down, but with measures of core inflation still elevated, major central banks remain focused on restoring price stability. Global growth slowed in the second quarter of 2023, largely reflecting a significant deceleration in China. With ongoing weakness in the property sector undermining confidence, growth prospects in China have diminished. In the United States, growth was stronger than expected, led by robust consumer spending. In Europe, strength in the service sector supported growth, offsetting an ongoing contraction in manufacturing. Global bond yields have risen, reflecting higher real interest rates, and international oil prices are higher than was assumed in the July Monetary Policy Report (MPR). The Canadian economy has entered a period of weaker growth, which is needed to relieve price pressures. Economic growth slowed sharply in the second quarter of 2023, with output contracting by 0.2% at an annualized rate. This reflected a marked weakening in consumption growth and a decline in housing activity, as well as the impact of wildfires in many regions of the country. Household credit growth slowed as the impact of higher rates restrained spending among a wider range of borrowers. Final domestic demand grew by 1% in the second quarter, supported by government spending and a boost to business investment. The tightness in the labour market has continued to ease gradually. However, wage growth has remained around 4% to 5%. Recent CPI data indicate that inflationary pressures remain broad-based. After easing to 2.8% in June, CPI inflation moved up to 3.3% in July, averaging close to 3% in line with the Bank’s projection. With the recent increase in gasoline prices, CPI inflation is expected to be higher in the near term before easing again. Year-over-year and three-month measures of core inflation are now both running at about 3.5%, indicating there has been little recent downward momentum in underlying inflation. The longer high inflation persists, the greater the risk that elevated inflation becomes entrenched, making it more difficult to restore price stability. With recent evidence that excess demand in post: BOC: Prepared to Raise Rates Further If Required post: BOC SAYS IT DECIDED TO KEEP RATES AT 5% GIVEN RECENT EVIDENCE THAT EXCESS DEMAND IN ECONOMY IS EASING, AND GIVEN LAGGED EFFECTS OF MONETARY POLICY #News #Markets #BOC #live post: BoC 'Concerned' About Sticky Inflation, Prepared To Hike Again - Rate Path To Hinge On Excess Demand, CPI, Wages, Pricing - Sees Higher CPI In Near Term, Little Downward Core Momentum - Signs Excess Demand Easing, Lagged Hike Impacts Drove BoC Hold
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- Posted: Sep 6, 2023 10:35am
- Submitted by:Category: Technical AnalysisComments: 0 / Views: 218