The clear drop in oil was at the center of attentions on Monday on the markets on Monday, while London and the main Asian stock markets are closed for a holiday, the organization of oil exporting products and its allies (OPEC+) having announced to accelerate their black gold production in June, despite the overabundance of the offer.
Eight OPEC+ member countries out of twenty-two said on Saturday that they would release 411,000 barrels a day in June, is as much as in May, while the initial reintroduction plan provided only 137,000 additional barrels.
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Around 07:30 GMT (3:30 am in Montreal), the barrel of American WTI gave up 3.02% to 56.53 dollars, when that of Brent of the North Sea lost 2.76% to 59.60 dollars.
“OPEC+ official communication indicates that the group puts barrels on the market because the healthy the fundamentals and stocks are weak,” notes Ipek Ozkardeskaya, analyst of Swissquote Bank.
“However, global growth forecasts collapsed due to the relentless trade war between the United States and the rest of the world, and the increase in production only aggravates the problems of overabundance of the offer,” said Ozkardeskaya.
“Last week, Saudi Arabia had already suggested that something important was about to happen by declaring that it was ready to tolerate a drop in oil prices for an extended period. The news of the weekend was therefore not a shock, but the reasons for this decision remain uncertain, “she continued.
Economists are trying to assess the impact of the pronounced decline in the price of black gold on the markets, while the London Stock Exchange is closed on Monday due to a public holiday, just like the main Asian stock markets.
“With a drop in the price of oil of more than 20% since the start of the year, energy prices have become a significant disinflationist factor, even if inflation remains higher than the objective of central banks” in most economies “developed, note economists from Deutsche Bank.
“This week, attention should turn to central banks again, with the latest decisions of the American Federal Reserve (Fed) on Wednesday and the Bank of England on Thursday,” they commented.
Since December, the rates of the powerful Fed have been in a range between 4.25% and 4.50% and the market expects the institution to leave its rates unchanged in May.
“The forecasts of the monetary institution for the month of June” will however be scrutinized, judges the analyst of Swissquote Bank.
The monetary policy decisions of central banks in Norway and Sweden will also be expected.
“These events arise as the markets have partially rid of the stress of recent weeks caused by Trump’s customs duties thanks to the hope of a de -escalation and the good American employment figures on Friday,” said Deutsche Bank economists.
European stock market indices take advantage of a light calendar on Monday morning to catch their breath after the earnings of the previous week.
Around 07:30 GMT, the star index of the Frankfurt Stock Exchange, the Dax, earned 0.25% while the CAC 40 in Paris ceded 0.40%.
On the currency market, the single currency was grasped 0.21% against the greenback, at 1,1321 euros for a dollar.
Upward
The drop in oil prices benefits “companies in the logistics sector and air transport,” comments Andreas Lipkow, an independent analyst.
At the European side, Ryanair was 5.68%, Air France-KLM took 2.91%, Lufthansa 1.98%, Dassault Aviation 1.29%.
“In addition, speculation circulates on a possible interest of Shell for its competitor BP”, both sides in London, noted Mr. Lipkow.
