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Monday, 6 June 2022

Markets shrug after OPEC ups oil supply increases + the US turns to foes for oil

Oil producers to temporarily up supply: OPEC+ has agreed to boost oil production in July and August by 650k barrels a day from the current 400k bpd, the alliance of oil producers announced in a statement following its Thursday meeting, bringing forward an increase it had initially scheduled for September. This came after weeks of lobbying from the US to convince cartel linchpin Saudi Arabia to ramp up production in response to falling Russian output.

This didn’t stop oil prices from rising: Brent crude rose back above USD 116 a barrel on Thursday as traders digested the news that supply will return to previous levels after August — and was trading above USD 120 as of early this morning.

Washington is turning to its adversaries to calm oil prices: The US could allow Venezuela and Iran to export more oil as it looks to bring down prices and ease pressure on Europe, which is trying to find alternative suppliers after pledging to ban Russian crude, according to Bloomberg and Reuters.

MEANWHILE IN GAS- LNG shipping rates are soaring: Shipowners are charging almost their highest rates in a decade to charter LNG tankers as sanctions on Russia cause energy companies to scramble to secure shipping capacity months ahead of winter. (Financial Times)

Also worth noting:

  • Has the USD “topped out”? The USD has dropped 2% from last month’s peak, leaving some analysts wondering whether the US economy is as strong as it seems and if the US central bank could be forced to slow its tightening cycle. (Wall Street Journal)
  • PIF to buy stake in Jordan’s Capital Bank Group: The Saudi sovereign wealth is acquiring a 24% stake (63 mn shares) in one of the Middle East’s biggest banking groups for USD 185 mn. (Statement)

Up

EGX30

9,986

-0.2% (YTD: -16.4%)

None

USD (CBE)

Buy 18.60

Sell 18.68

None

USD at CIB

Buy 18.62

Sell 18.68

None

Interest rates CBE

11.25% deposit

12.25% lending

Up

Tadawul

12,656

+0.4% (YTD: +12.2%)

Down

ADX

9,837

-0.2% (YTD: +15.9%)

Down

DFM

3,387

-0.3% (YTD: +6.0%)

Down

S&P 500

4,109

-1.6% (YTD: -13.8%)

Down

FTSE 100

7,533

-1.0% (YTD: +2.0%)

Down

Euro Stoxx 50

3,784

-0.3% (YTD: -12.0%)

Up

Brent crude

USD 121.38

+1.4%

Up

Natural gas (Nymex)

USD 8.85

+3.9%

Up

Gold

USD 1,855

+0.3%

Up

BTC

USD 29,942

+0.6% (YTD: -35.3%)

THE CLOSING BELL-

The EGX30 fell 0.2% at yesterday’s close on turnover of EGP 347 mn (58.8% below the 90-day average). Local investors were net buyers. The index is down 16.4% YTD.

In the green: Ezz Steel (+6.3%), MM Group (+6.1%) and Heliopolis Housing (+1.8%).

In the red: Orascom Construction (-2.6%), Orascom Development Egypt (-2.2%) and EFG Hermes (-2.2%).

Asian markets are in the red this morning with the exception of Seoul’s Kospi. Futures suggest a brighter picture on Wall Street when it opens later in the day, while European markets look set for a more mixed start to the day’s trading.

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