Oil markets already fading the expected extension to OPEC cuts - ING
Analysts at ING note that there is a growing consensus that OPEC will extend their current output deal when they meet in Vienna today and believe it will run through to the end of 2018.
“The meeting may just be noise for oil markets – and it seems the only scenario that would offer significant upside to prices would be if OPEC surprised the market by not only extending the deal, but making deeper cuts. Earlier this month, we noted that Petro FX have largely lost their ‘oiliness’ – meaning that there is evidence of a structural breakdown in the correlations between oil and the likes of CAD, NOK and RUB over 2017. This has been somewhat due to the range-trading in oil markets, with the focus for FX shifting to interest rates and central banks.”
“Equally, it’s to do with the nature of oil price moves – which have been mainly driven by exogenous supply fears – as opposed to a demand story. Indeed, for CAD the focus for now remains more on the BoC’s policy bias – with tomorrow’s 3Q GDP print likely to be a key factor ahead of next week’s BoC meeting (Wed). USD/CAD could test the recent highs around 1.2915/20 on a negative OPEC reaction (risks of a move above here low).”