All Eyes on Oil as Saudi Arabia Looks to Increase Production
Direction of the global economy remains dark and rumours are rife Saudi Arabia intends to further increase its oil production. This week the current contract expires on Brent Oil, which fell a further 0.6% to $111.3 but WTI held up at 0.2%.
In the wake of the ECB and the Fed there has been a new operation of quantitative easing by the Bank of Japan (BoJ). The BoJ has increased the note for asset purchases of 45,000 to 55,000 billion yen in response to the actions of other central banks, the weakness of the Japanese recovery and the relative strength of the yen.
A renewed quantitative easing is always welcome in Japan, where the economy is hit by deflation. As well as measures to support the economy (which is good for oil demand) tends to weaken the relative value of fiat currencies (which is good for property prices and intrinsic value, such as oil).
This afternoon, operators will monitor weekly commercial stocks of crude oil released from the U.S. Energy Information Agency (EIA). A new accumulation is expected, which would not bode well for the price.
The fact remains that the supply of oil is highly dependent on the policy of the OPEC cartel of producers led by Saudi Arabia controlling over a third of global supply. And the price of crude oil currently exceeds the objective of the Saudi kingdom to be at $100 a barrel.