- OPEC Failed To Agree, Oil Climbs
- European Central Bank Prepares For Comprehensive Strategy Review
- No Surprises From The Reserve Bank Of Australia
OPEC Failed To Agree, Oil Climbs
The meeting between OPEC and its partners, which was supposed to negotiate a crude output agreement after the group unexpectedly failed to reach a deal last week, has been canceled.
Brent crude rose as OPEC+ ended talks without agreeing to increase output. Futures rose 1.3 % in the London market on Monday to hit over $77 a barrel.
Many OPEC+ members had agreed to a production increase of 400,000 barrels per day from August. Still, the United Arab Emirates wanted to produce an extra 700,000 barrels per day by changing the method used to calculate production quotas.
“For us, it wasn’t a good deal,” UAE Minister of Energy and Infrastructure Suhail Al Mazrouei told CNBC’s Hadley Gamble on Sunday. He added that while the UAE was willing to support a short-term increase in oil supply, it wants better terms through 2022.
UBS analyst Giovanni Staunovo said that Brent oil could climb to $80 a barrel by September if production from OPEC+ does not come.
A statement from OPEC later confirmed the claims, saying that “the date of the next meeting will be established in due time.” Bloomberg also stated that this indicated OPEC+ would maintain current output quotas.
Brent oil for September delivery rose 0.4 % to $77.48 a barrel on the London ICE Futures Europe market. Meanwhile, West Texas Oil for August delivery rose 2% since Friday evening to $76.70 a barrel on the Nymex market.
European Central Bank Prepares For Comprehensive Strategy Review
The European Central Bank (ECB) is preparing to carry out the most comprehensive strategy review in nearly 20 years.
One of the critical issues of the review, which was planned under the leadership of ECB President Christine Lagarde at the beginning of 2020, but postponed due to the coronavirus pandemic, will be the bank’s inflation targeting. The ECB’s principal goal is price stability; hence the review of the inflation target is key to its mission.
In addition, since taking office, Lagarde has emphasized the ECB’s role in addressing climate change. Thus, the ECB’s role in fighting climate change, as well as how to handle an ever-evolving labor market, will also be high on the agenda.
Price stability, which is the main objective of the ECB, will be at the center of the talks. The current 2% target in inflation was set at a time when the struggle against price pressures became prominent. While some ECB members favor maintaining this target flexibly, others argue that above this level can be tolerated.
Even before the epidemic, the ECB, like other central banks, had substantially enlarged its arsenal and now relies on asset-purchase programs, low-cost bank lending, negative deposit rates, and forward guidance to meet its aim. Policymakers, according to Lagarde, must assess what would happen if interest rates remain low, as well as what might be considered normal in such circumstances.
According to persons familiar with the situation, the conversations will begin with a dinner in Frankfurt on Tuesday. They might end with an announcement as soon as this week if the final barriers are passed. An ECB spokesperson said the institution has planned “several meetings that might be held in person, health and safety regulations permitting.”
No Surprises From The Reserve Bank Of Australia
The Reserve Bank of Australia opted to maintain official interest rates unchanged for the eighth month in a row on Tuesday. The RBA did not change its policy rate and 3-year return target, in line with market expectations.
The bank kept the policy rate constant at 0.10%. Economists participating in the Bloomberg survey expected that the interest rate would be kept constant at 0.10%.
The 3-year return target was left at 0.10%, in line with the market expectations. The bank anchored its yield target to the 2024 maturity bond.
The Reserve Bank of Australia has made a temporary extension of its quantitative easing program. From September, the central bank will continue to buy government bonds at the rate of $4 billion a week, down from the current $5 billion.
Mr. Lowe, on the other hand, argues that the RBA would continue to buy bonds until there is clear evidence that a better economy is translating into wage growth and higher inflation.
RBA governor Philip Lowe said on Tuesday Australia’s economic recovery was stronger earlier than expected, with the growth forecast to continue.
Economic data released in Australia pointed to a strong recovery. Unemployment in the country fell to 5.1%. During the pandemic process, this figure had increased to 7.4%.