Failed Doha talks pulls down Oil markets

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Image via UNIDOSulaiman Al-Herbish, Director General, the OPEC Fund for International Development (OFID) at Vienna Energy Forum 2015

Today’s Economic events

  • UK Rightmove HPI m/m 1.30% vs. 1.30% previously
  • Australia new motor vehicle sales m/m 2.20% vs. 0.0% previously

Coming Up

  • Canada foreign securities purchases
  • FOMC Member Dudley speech
  • US NAHB housing market index
  • Australia CB leading index

The weekend meeting between 15 OPEC and non-OPEC members ended in a stalemate but not without its fair share of drama. On Saturday, Iran officially announced that it would not participate in the meeting, later on, Sunday the first half of the meeting saw the wording on the Doha agreement being re-drafted at Saudi Arabia’s insistence. When talks resumed later in the evening, it was clear that Saudi Arabia was unwilling to move without having Iran on board to limit oil production.

WTI Crude oil futures opened the day over 5.0% lower from Friday’s close and brought a modest risk off sentiment. However, by mid-day the markets were seen to be stabilizing with Oil recouping nearly half the losses.

Economic data from Asia was limited leaving traders to focus on the oil market developments. The yen opened the day on a weaker note at 108.15 and briefly dipped to a new session low of 107.827 before managing to pull back higher. USDJPY is down 0.40% at the time of writing. The commodity-linked currencies were trading mixed today. AUDUSD is down 0.19% recovering from an initial decline to daily’s lows of 0.7644 before rallying back to fill the gap. NZDUSD, on the other hand, is up 0.32% for the day. The Kiwi gained as data from Sunday showed that New Zealand’s CPI increased 0.20% in the first quarter of 2016.

Asian equity markets closed in the red today with the Nikkei225 down 3.40% while the Shanghai Composite lost 1.43%.

In Europe, the risk off sentiment gave the euro a boost as EURUSD traded 0.15% higher for the day, posting a second day of recovery after falling to lows of $1.1243 last Thursday. GBPUSD was trading mixed today as the cable initially fell to a session low of $1.414 before attempting to push higher. However, GBPUSD remains weak, down 0.19% at the time of writing. European equity markets are down 0.10% and 0.20% respectively on the German DAX and the FTSE100.

USDCAD is currently seeing some strong gains tracking Oil’s loss which has led to a weaker Canadian dollar. USDCAD is up 0.70% for the day as prices gapped higher on the day. The NY trading session is expected to be quiet with no major releases that could impact the markets. US equity futures are pointing to a weaker open with the Dow Futures down 0.28% while the S&P500 futures are down 0.35%. The Nasdaq100 futures are down 13.75 points or about 0.30% lower ahead of the opening bell.

On the commodity front, Gold prices are up 0.31% for the day, trading near $1238 an ounce currently. Meanwhile, Crude Oil futures are trading currently at $38.5 a barrel.

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