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Russia, OPEC to Sign Partnership Deal

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  • Russia, OPEC to Sign Partnership Deal

Russia is planning to sign a partnership agreement with Organisation of Petroleum Exporting Countries (OPEC), Energy Minister Alexander Novak said on Monday.

Novak said the deal would be discussed at the OPEC Dec. 6 meeting.

NAN reports that on Sept. 11, Novak said that he believed OPEC and their allies within the production cut alliance should ink an agreement on the group’s broader cooperation in December so that the new partnership format comes in force from Jan. 1.

“It will be expedient to sign it in […] early December so that it comes in force from Jan. 1,” Novak told newsmen.

The group plans to institutionalise and make permanent their current alliance, which began in late 2016.

The current production cut agreement, in force from January 2017, has envisaged the group to remove a combined 1.8 million b/d of crude from the market to help the market rebalancing.

The move helped to boost oil prices from a two-year slump.

A draft charter for the broader, permanent cooperation seen last week by S&P Global Platts calls on ministers of the 24-country producer coalition to meet at least once a year to discuss output policy and review supply and demand.

Novak’s comments signaled Russia fully supporting OPEC’s plans to sign a framework agreement in December, during the Vienna general meeting by OPEC and non-OPEC countries taking part in the deal.

The broader cooperation is seen as an evolution to the current production cut deal, Novak said, when asked if the current production cut agreements could be prolong into 2019.

“They are linked. The broader cooperation agreement is developing from the current deal, with some changes in the format,” he said, speaking on the sidelines of a major economic event in Vladivostok.

Novak also did not rule out that some further adjustments to the current production cut agreement are possible later this year, should the market require additional joint actions amid concerns over oil supply shortages due to U.S. sanctions against Iran, as well as supply risks from other countries such as Libya or Venezuela.

“We’re interested in the stable market and avoiding misbalances in either direction,” Novak said. “If we see that we need to increase output, such decisions could be discussed,” he said.

It is too early, though, to speak about the concrete decisions at the moment, he added.

“Now we need to analyse the results of three months, July-September, and then the forecast for the fourth quarter and the first quarter of 2019.

“After that we’ll discuss concrete proposals,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Investment

Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies

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Barclays to High Net Worth Clients, Stay Off Africa and Other Emerging Economies

Barclays, one of the world’s largest investment banks, has started advising high net worth clients to stay off Africa and other emerging economies.

According to Barclays, despite the recent recovery noticed in emerging-market stocks, investors are better off avoiding the risks that still abound in emerging nations. Barclays Plc, however, advised high net worth clients to focus on U.S equities despite the S&P’s breakneck rally.

The investment bank said emerging economies do not have enough fiscal buffers to spend their way out of the COVID-19 pandemic and will likely continue to struggle in the near-time compared to the US with 12 percent of gross domestic product fiscal-support.

It said the huge US stimulus may halt rebound in emerging-markets stocks as more money is expected to flow into the world’s largest economy and its European counterparts.

“Compared to the U.S., emerging-market economies appear more vulnerable,” said Haider, the London-based managing director and head of global growth markets. “Their central banks have less room to maneuver, their governments may not be able to provide unlimited support and equity markets, given their sector mix, can be more challenged by an economic slowdown.”

Barclays added that even after 33 percent rebound in stocks of emerging markets since the panic selloff subsided in March, stocks are still down by 9 percent from year-to-date while the US S&P 500 stocks are up by 45 percent. Presently, their stocks trading at a 36 percent discount to US stocks, up from 25 percent three months ago.

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Economy

Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension

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  • Crude Oil Hits $43.1 Per Barrel Following OPEC’s Production Cuts Extension

Brent crude oil, against which Nigerian oil price is measured, rose by 1.25 percent on Monday during the Asian trading session following OPEC and allies’ agreement to extend crude oil cuts to the end of July.

OPEC and allies, known as OPEC plus, agreed to extend production cuts of 9.7 million barrels per day reached in April to July on Saturday.

In the virtual conference, delegates agreed that members, including Nigeria and Iraq presently struggling to attain a 100 percent compliance level must keep to the agreement or be forced to do so in subsequent months.

Nigeria, Iraq and others failed to keep to the cartel’s agreement in May after reports show that Nigeria only managed to attain a 19 percent compliance level during the month while Iraq struggled to attain just 38 percent in the same month.

Russia and Saudi Arabia, the two largest producers of the group, warned members to stick to the agreed quota if they want to rebalance the global oil market.

While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.

Earlier on Monday, Brent crude oil hits $43.1 per barrel, more than a month record-high, before pulling back slightly to $42.83 per barrel.

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Economy

Gold Dips by 2 Percent on Better Than Expected Job Report

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  • Gold Dips by 2 Percent on Better Than Expected Job Report

Gold prices declined by 2 percent on Friday following a better than expected US non-farm payroll report.

The report showed an increase of 2.5 million payroll numbers against a decline of 7.5 million predicted by many experts.

The surprise number boosted investors’ confidence in US recovery as many dumped their haven investment (gold) for the stock market.

“We had significantly stronger-than-expected U.S. payroll numbers – an increase of 2.5 million versus an expectation of a decline of 7.5 million – that 10-million swing has brought forward expectations of the economic recovery in the United States,” said Bart Melek, head of commodity strategies at TD Securities.

Spot gold immediately declined by 1.9 percent per ounce to $1,678.81 while the U.S. gold futures slid 2.6 percent to settle at $1,683.

Gold was also being pressured by stronger yields and a slightly firmer dollar, “meaning the opportunity cost to hold gold in the portfolio has gone up,” Melek added.

The surprise didn’t stop there, US Dow Jones was up 614 points despite the protest going on the US and US-China tension.

Also, NASDAQ rose by 29 points while the S&P index added 50 points increase.

Note: Investors generally increase their investments in gold and other haven assets during a crisis to avert risk exposure and do the opposite once they sense a better economy.

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