On Wednesday, the OPEC+ members regrouping the world’s biggest and most powerful oil producers agreed to cut production by 2 million barrels per day to push prices back up after falling to roughly $80 from $120 in early June. The move angered Washington as it happens weeks before the American midterm elections, and could have political implications for Joe Biden who visited Saudi Arabia precisely to push for an increase in the production.
The European Union who agreed on capping Russian oil prices is also seeing the decision land a big blow to its price capping plans. The International Energy Agency chief also shared his worries about Europe’s energy plans for the next year. Currently close to 90% of European gas storage is full but come the spring and once the storage fall down to 25%-30% of capacity, European nations might find filling the storage facilities as difficult then as it is now with the war in Ukraine. Indeed, with sluggish economic performance, China imported a lot less gas than it would have otherwise in the last few months, and therefore if China starts importing again to their pre-covid levels, prices will go up and might force Europe to look at alternative energy sources, like RWE in Germany which has started already to restart three of its brown coal facilities.
After Monday’s manufacturing PMIs, yesterday saw the services PMI figures come out in the EU, and only the French services PMI appears in expansion as German, Spanish, Italian and Eurozone services PMI fall below the 49.
The United States also see their services PMI show an industry in contraction as the September figure reads at 49.3, but up from 43.7 in August.
The United Kingdom on the other hand sees its services stagnate at 50.0, but composite PMI at 49.1 draw a darker picture for British businesses.
Cable fell by -1.28% yesterday. GBPUSD opened at 1.1476 and closed at 1.1326.
EURUSD followed a similar trend as it fell by -1.01%. The pair opened at 0.9986 and closed at 0.9882.
GBPEUR saw less volatility as the pair opened at 1.1491 and closed at 1.1459.
