June 12, 2017
According to the Wall Street Journal, Qatar will commit to the OPEC output agreement through March 2018 despite its political tension with other producers within the cartel. Qatar’s energy minister Mohammed al-Sada said that “circumstances in the region shall not prevent the state of Qatar from honoring its international commitment of cutting its oil production”.
Saudi Arabia will reduce crude supply to Asia and the US in July, and the cut “would be slightly deeper than in June” according to Reuters. State firm Saudi Aramco will lower crude volume by 200,000bpd for Indian customers, and by about 110,000bpd for China. A Reuters source said that supply to the US would be down by about 35% in July from the June level. In other news, costs to ship crude oil and refined products from Qatar are expected to increase due to logistics disruptions caused by a ban on Qatar’s vessels by the United Arab Emirates.
Economic data released over the weekend were neutral to unsupportive. Machine orders for Japan in April fell sharply by 3.1 percent month-on-month (Econoday consensus was for a 0.5% rise), after a 1.4% increase in March. The Producer Price Index for Japan stayed flat for the month of May, while it was expected to edge up by 0.1%. Industrial production for Italy disappointed with a drop of 0.4% in April (Econoday consensus was for a 0.2% increase). The May CPI for India rose 2.18% year-on-year, compared with a rise of 2.99% in the previous month, and industrial production for India in April was up 3.1%, down from a 3.8% increase in March. Market participants looked ahead to the CPI and industrial production in the UK and the US, as well as industrial production in the Eurozone released later this week, for further direction.