Rates as of 0500 GMT

Market Recap

Lots of volatility in oil!

The graph below shows how oil prices were falling yesterday morning after the FT headline I showed Saudi Arabia ready to pump more oil if Russian output sinks under ban ran. Then the jump in prices around 1200 GMT yesterday follows the end of the OPEC meeting, where the group agreed to increase production by 648k barrels a day bd in July and August.

This is about 50  more than what they had been expected to do 430k. Odd that increasing output by more than expected should send the price up, but people were worried that the FT headline might mean that other OPEC members would step in to fill the gap in the market created by Russias problems, which has removed about 1mn bd from the market so far and will likely get worse. Or even remove Russia from the OPEC quota system altogether. These moves probably wouldve resulted in an even greater increase in output so prices moved up.

In any case the agreeupon increase only amounts to a 0.4 increase in global oil supplies so its not going to shift the supplydemand curve significantly. And crucially, the additional oil will be allotted to OPEC members according to their quotas, which means that the actual increase in output is likely to be much less most countries cant increase output significantly regardless of what theyre allowed to produce.

US President Biden and other G7 officials had been asking begging? OPEC to increase production and so they welcomed…