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Oil Reverses Following Comments from Russian Oil Minister

By:
David Becker
Updated: Oct 21, 2016, 15:39 UTC

European stock markets are mixed buoyed by higher oil prices which reversed earlier losses. The DAX is up 0.10% and the FTSE 100 up 0.44% on the day,

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European stock markets are mixed buoyed by higher oil prices which reversed earlier losses. The DAX is up 0.10% and the FTSE 100 up 0.44% on the day, after Asian markets also closed narrowly mixed. European markets in particular seem to be taking a breather going into the weekend, but are managing to hold their biggest weekly gain in a month, amid better than expected earnings reports. Merger and acquisition activity also underpinned markets this week, and the Stoxx 600 is heading for a rise of more than 1% this week, after Draghi managed to ease tapering fears.

Oil prices have reversed out of intraday losses, with WTI showing gains of about 0.5%. Russia’s energy minister, Novak, that the fundamentals of the oil market are looking upward, and that OPEC production had peaked and will fall if agree cuts are implemented, while global inventory declines. OPEC meets in Vienna on November 30, where implementation of production cuts will be high on the agenda.

ECB Survey Shows Long Term Inflation Remains Stable

An ECB survey shows long term inflation expectations stable. The ECB’s survey of professional forecasters shows that the inflation estimate for this year was cut to 0.2% from 0.3% previously, further out, the forecast for 2017 was left unchanged at 1.2% and the forecast for 2018 was trimmed slightly to 1.4% from 1.5%, lower than Consensus Economics and Euro Zone Barometer projections of 1.6%. Long term inflation expectations in the ECB’s survey were unchanged at 1.8%. The latter is broadly in line with the ECB’s definition of price stability as below, but close to 2%. Growth forecasts meanwhile show a slight downward revision to the longer term forecast to 1.6% from 1.7% previously.

Canadian CPI is due Friday, and expected to rise 0.2% month over month in September after the 0.2% drop in August. Total CPI is seen accelerating to a 1.4% year over year pace in September from the 1.1% rate in August. A pick-up in gasoline prices is expected to drive the gain in total CPI during September relative to August, contrasting with the hefty gasoline price declines that were a drag on total CPI in July and August. The Bank of Canada’s core CPI is seen rising 0.2% month over month in September after the flat reading in August, leaving a 1.8% year over year pace that is identical to the growth rate in in August.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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