OPEC . Image by PUNCH
After OPEC delayed its meeting, oil prices fell even lower.
On Thursday, oil prices experienced further losses following the unexpected announcement by OPEC of a significant delay in a key policy meeting, indicating potential disruptions within the bloc.
Concurrently, the equities market displayed mixed performance as two US reports tempered recent optimism regarding the future of interest rates.
Both primary crude contracts declined upon learning that the highly anticipated gathering of major producers, including OPEC and 10 allies, would be postponed by four days to November 30.
Although prices had initially plummeted nearly five percent on Wednesday, they later recovered some of the losses.
Reports suggest that the decision to delay the meeting was prompted by resistance from Angola and Nigeria against lower production targets proposed by others. Saudi Arabia was reportedly considering an extension of a one-million-barrel-a-day output cut into the new year.
Earlier this year, Riyadh and Russia implemented significant reductions in an effort to elevate prices, which have been adversely affected by sluggish economies in the United States, Europe, and notably China.
According to Pierre Andurand, a representative from Andurand Capital Management, the current state of world supplies has proven to be more robust than initially anticipated.
Consequently, this implies that the OPEC+ cartel will be compelled to implement a reduction in its production levels.
It is likely that the Saudi Arabian government will seek to encourage other nations to also reduce their respective outputs. Andurand stated in an interview with Bloomberg TV that the upcoming event will involve a negotiation.
The equity markets in Asia exhibited volatility, despite seeing a recent upward movement before to the Thanksgiving holiday on Wall Street.
Despite experiencing early losses, Hong Kong managed to recover and achieve a slight increase in the afternoon.
This was mostly driven by the performance of developers, as news surfaced that China is planning to provide additional help to the property sector. Consequently, there is a need for banks to enhance their efforts in assisting the industry.
Subsequent to the revelation by Bloomberg News on Wednesday, it was revealed that authorities have established a preliminary roster of 50 companies that would qualify for additional financial assistance.
Country Garden, a company facing financial challenges, had a significant increase of almost 23 percent in its stock value following reports of its inclusion in the list of winners.
Another developer facing difficulties, Evergrande, experienced a positive increase of almost three percent.
In addition, the cities of Shanghai, Seoul, Wellington, Mumbai, and Jakarta experienced an increase, while Sydney, Singapore, Taipei, Manila, and Bangkok witnessed a decline.
London, Frankfurt and Paris all rose at the open.
According to a statement by the University of Michigan, the lacklustre performance can be attributed to an increase in inflation expectations among American consumers.
These consumers now anticipate a 4.5 percent inflation rate over the next year, which is somewhat higher than the previously anticipated rate of 4.4 percent.
In a separate development, the number of jobless claims in the US turned out to be significantly lower than expected, indicating the continued resilience of the labor market.
The Federal Reserve has consistently emphasized that its decisions on interest rates would be driven by data, with a particular focus on indicators such as inflation and employment.
These figures provided a slight disruption to the positive sentiment on trading floors, which has been prevalent since the release of below-average consumer price figures last week, reinforcing optimism that the cycle of rate hikes has concluded and that cuts might be anticipated in the coming year.
“Markets can be unpredictable at times, and currently, investors are seeking confirmation that the Fed has concluded its current tightening cycle. Any evidence to the contrary can be disconcerting,” commented Rodrigo Catril of the National Australia Bank.
According to the speaker, the most recent data from the United States has resulted in a market response that is deemed to be disproportionate.
The data pertaining to jobless claims and inflation expectations in the United States does not provide support for the narrative that US inflation is diminishing in the face of a declining US labour market.
However, analysts have noted that the prospects for stocks remain optimistic.
According to Audrey Goh, a representative from Standard Chartered Bank, it is anticipated that the upward trend in the stock market will persist.
“If you look at inflation, it has clearly moderated, so the Fed will be able to stand pat.” We believe that policy rates have peaked.”