Oil-exporters’ cartel OPEC has released its outlook for crude to trade at US$55 per barrel in 2018, about 4% higher than its current ‘reference basket’ price. We are not so sure. While bullish on petroleum production, we think that prices might be held in check by OPEC itself, which will not want to risk raising prices too far or too fast.

OPEC foresees the world economy growing at 3.6% next year, up from a previous estimate of 3.5%. Demand for crude, now at 32.8 million barrels a day, is expected to climb to 33.1 million barrels. Still, current prices are below the cost curve of most US shale-oil producers, and OPEC has every interest in keeping them there to keep their competing supplies in the ground.

Will EUR/CHF finally break the 1.20 threshold?

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There is scant chance that the Euro will breach CHF 1.20 before the European Central Bank meeting on monetary policy of 14 December, but after that? A crawl-back to 1.20 – which the Swiss National Bank held as a floor until in early 2015 it let the franc float – could be on the cards. But it will take time.

Latest data are disappointing. Core inflation in the Eurozone eased to 1.1% annually in September, and broader inflation contracted during the summer, which will make the ECB wary of tightening money. We believe that the ECB will stay very cautious, taking only limited measures to boost the Euro. Economic growth has returned to the Eurozone, but further rises in the Euro’s value are still on the horizon.


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