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Wednesday, 2 June 2021

OPEC+ agree to raise supply in July

OPEC+ oil producers have agreed to continue relaxing curbs on oil production in July as a global economic recovery boosts demand for crude in the US, China and Europe, the ministers of the group announced following a virtual meeting yesterday, Bloomberg reports. The loose alliance of producers is now expected to add another 841k bbl/d to the market next month.

Bullish demand forecast sees oil hit two-year high: Oil prices breached USD 70/bbl for the first time since 2019 on the OPEC’s bullish forecast for rest of the year, as well as a drop in global supply glut that was stockpiled during the pandemic, according to the Wall Street Journal. OPEC now sees demand rebounding strongly in 2H2021 and nearly reach pre-crisis levels before the year is out.

Concerns over inflation and an overheating market are starting to grow: After a year of battling against collapsing prices and plummeting demand, oil producers are now facing the opposite problem: the risk of a surge in demand causing a deficit in the market, causing prices to surge. Under the agreement negotiated last year to end the Saudi-Russia oil price war, producers are due to maintain production levels until April 2022, but pressure to increase supply will grow if demand continues its current trajectory.

Lebanon is headed off the cliff: That’s the only conclusion to take from this World Bank report, which warns that the economic crisis facing the country may be one of the three most serious faced by any country since the mid-19th century. “In the face of colossal challenges, continuous policy inaction and the absence of a fully functioning executive authority threaten already dire socio-economic conditions and a fragile social peace with no clear turning point in the horizon,” the bank writes.

The European Central Bank’s resolve to maintain ultra-easy monetary policy will be put to the test when it meets next week, as inflation begins to pick up, the Financial Times reports. Inflation in the eurozone surpassed the bank’s 2% target for the first time in more than two years last month, raising pressure on policymakers to begin winding down stimulus. But ECB president Christine Lagarde expects heightened inflation will be short-lived, and maintains the bank’s highly accommodative policy will be appropriate until at least next year, when inflation is expected to cool.

Down

EGX30

10,240

-0.7% (YTD: -5.6%)

None

USD (CBE)

Buy 15.63

Sell 15.73

None

USD at CIB

Buy 15.63

Sell 15.73

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

10,597

+0.4% (YTD: +22.0%)

Up

ADX

6,613

+0.8% (YTD: +31.1%)

Up

DFM

2,837

+1.4% (YTD: +13.9%)

Down

S&P 500

4,202

-0.1% (YTD: +11.9%)

Up

FTSE 100

7,080

+0.8% (YTD: +9.6%)

Up

Brent crude

USD 70.63

+1.9%

Up

Natural gas (Nymex)

USD 3.10

+4.0%

None

Gold

USD 1,905.00

-%

Down

BTC

USD 36,131

-1.5% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 0.7% at today’s close on turnover of EGP 1.53 bn (14.9% below the 90-day average). Foreign investors were net sellers. The index is down 5.6% YTD.

In the green: Orascom Financial Holding (+5.2%), Export Development Bank (+3.6%) and EFG Hermes (+0.9%).

In the red: Ibnsina Pharma (-6.3%), GB Auto (-2.9%) and Pioneers Holding (-2.6%).

Asian markets are mixed in early trading this morning, with Chinese equities falling and other Asian shares in the green. Futures suggest that European and US markets will rise at the opening bell opening later today.

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