- Output Bets Spur Oil; Euro Rises on Merkel Comment
Oil rose a fourth day in the build-up to OPEC’s gathering in Vienna this week, as bets grow that production cuts will be extended into next year. The euro advanced after Angela Merkel said the “too weak” currency shared the blame for Germany’s trade surplus.
Crude climbed to the highest in a month as Saudi Arabia’s energy minister said all producers participating in a deal to limit output agree on extending the cuts by nine months. The euro hit a six-month high after Chancellor Merkel’s comment, made while responding to questions about German foreign policy. Sterling fell following a U.K. threat to walk away from talks on its departure from the EU.
Elsewhere there was relative tranquility across markets, suggesting investors think global growth can weather political turmoil in the U.S. and Brazil, even as the world’s largest economy edges closer to another increase in borrowing costs. Money managers will be scrutinizing minutes released this week from the Federal Reserve’s latest meeting to gauge the chances of a rate hike next month.
Meanwhile, President Donald Trump is trying hard to deflect attention from the domestic political crisis surrounding former FBI Director James Comey. He’s traveling in the Middle East, where U.S. companies have signed multi-billion dollar deals in the defense, energy and infrastructure industries, before continuing on to Europe.
“With Trump on a tour, the hope is we see less news over the next couple of days — a chance for the waters to settle,” said Andrew Sullivan, a managing director for sales trading at Haitong International Securities Group Ltd. in Hong Kong. “It’s another overhang on the market. We’ve got all these markets trading at highs and people don’t want to miss out, but they don’t want to be caught out.”