29.09.2016 - OPEC decided to cut oil production
The price of gold showed a slight decline after Fed Chairman Janet Yellen said about the improvement of the situation in the banking sector, as well as the country's labor market. It should be noted that the probability of monetary policy tightening after the speech Mrs. Yellen has grown, which is negative for gold, that becomes less attractive compared with the assets that generate interest income. Today, the dynamics of trading will affect the data on the growth of US GDP in the second quarter (12:30 GMT) and speeches by the Fed officials. One factor that is able to support the growth of the country's stock markets could be a drop on the stock markets, which will increase the demand for defensive assets. Our medium-term outlook for gold remains positive with the objectives at 1400-1430 dollars per troy ounce.
The price of Light Sweet crude oil showed a sharp rise after the informal meeting of members of OPEC that at the international energy conference agreed to reduce the volume of production to 32,5-33,0 million barrels per day against the current level of about 33.24 million barrels per day. Details of the agreement will be discussed at a formal meeting of OPEC in November. According to our estimates, this decision will have a limited impact on the situation with an excess of oil on the market due to the likely continued growth in drilling activity in the US against the background of production restrictions in OPEC countries. In addition, at the moment it is not clear how will be reduced production volumes against the background of previous statements of intentions to increase the supply of oil from Nigeria, Libya, Iran and Iraq. Our medium-term outlook for oil remains negative, but the current growth may continue in the near future.