OPEC Deal Uncertain as Ministers Meet in Vienna

European equity markets are expected to open a little mixed, while oil is seeing some profit taking following yesterday’s sharp losses as OPEC ministers prepare to meet in Vienna.

Moves in oil have been a little wild again recently, with the build up to the OPEC meeting offering the usual mix of rhetoric that leaves traders none-the-wiser about whether a deal is likely to be struck. As always, there appears to be an agreement that a production cut is necessary but unfortunately, the implementations of such a cut is far more difficult to negotiate, hence the skepticism that followed the “deal” in Algiers.

OPEC Cacophony

Still, despite the apparently unsuccessful meetings that have already taken place this week, traders have not given up hope of a deal happening today just yet. Brent and WTI both continue to trade just above $45 a barrel, roughly in the middle of where we could see them trading if a deal is either agreed or scrapped. I think the most likely outcome may be a deal that comes with so much conditionality that markets lose faith in it being fully implemented before too long. This may though be enough to see oil trading back above $50 though in the short to medium term.

Brent Daily

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Away from Vienna, there are a number of other economic events today that will be of interest. The flash reading of eurozone inflation for November is expected to edge slightly higher this morning, although not likely enough to impact the outcome of the December ECB meeting at which we’re expected an extension of the QE program to be agreed.

Canadian Dollar Waiting on OPEC Decision

This will be followed later by the US ADP release, as well as personal income and spending figures and core PCE price index, the Fed’s preferred inflation measure. With a December hike now almost entirely priced in, the data is unlikely to offer much more upside but it will be interesting to see if traders will be spooked by some weaker reports ahead of the meeting. We’ll also hear from three Fed officials today – Robert Kaplan, Jerome Powell and Loretta Mester – and get the latest oil inventory data from EIA.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.