The Paris Stock Exchange erased, on Tuesday, almost all the gains it had made yesterday. the Bedroom 40 ends down 0.74%, at 6,500.35 points, while, unlike yesterday, TotalEnergies (+0.4%) did not progress enough to support the trend. With the price of oil returning to over $120 a barrel for Brent, crude-related company stocks stood out today on the stock market: CGG, Technip Energies and Vallourec record the best performance of the SRD.
“Last week, at its monthly meeting, OPEC+ pledged to increase its July production quota by 648,000 barrels per day instead of the expected 430,000recalls Edoardo Campanella, economist at Unicredit. With the oil market extremely tight, the additional production was applauded by investors with a temporary drop in Brent and WTI prices”…until they realize that “ production promises made by the cartel are unrealistic, the market will continue to be severely undersupplied at a time when post-pandemic oil demand resurfaces “, in particular because China has started to lift health restrictions in Beijing and Shanghai.
OPEC + was meeting to decide on production quotas for July and August. The organization has agreed to accelerate the increase in its production, by 50% compared to the current rate. 216,000 barrels more than initially expected are expected on the market this summer. But this is only theory since this new increase in production will not be supported only by Saudi Arabia or the United Arab Emirates, but will be distributed among OPEC members. This includes countries like Libya or Nigeria, which have already missed their previous production targets due to capacity constraints (or even Russia which Western sanctions prevent from producing normally). In fact, specialists at Citi have calculated that there would be only 132,000 barrels more than now on the market. “Currently, the market is in deficit of 750,000 barrels per day. This increase therefore remains insufficient to balance the market.we add within the private bank Oddo BHF, where we explain that it is the improvement of relations between the United States and Saudi Arabia which is at the origin of this decision of OPEC + to pump more.
The stock market was still hoping on Friday that Joe Biden’s announced visit to Saudi Arabia this month would pave the way for further production increases, but that potential trip has been pushed back to July, US press reported this month. weekend.
The RBA in turn raises its rate by 0.5 points
Inevitably, with oil prices rising again, worries about inflation are once again agitating the financial markets, which are also waiting, with a little feverishness, for the publication, on Friday, of official figures on the evolution consumer prices in the United States for the month of May. “The inflationary risk remains the major concern of investors”observes Patrick Guérin, co-director of management at Bordier & Cie, the French subsidiary of the Swiss private bank.
READ ALSO : Chat with Denis Lantoine, “No return to the market as long as the level of inflation is ‘unacceptable'”
To fight inflation, the Bank of Australia (RBA) overnight raised its main key rate by 50 basis points, i.e. twice as much as expected, to bring it to 0.85%, proceeding from the same its strongest monetary tightening in 22 years. The RBA is following in the footsteps of the US Federal Reserve (Fed), the Bank of Canada and the Bank of New Zealand, which have carried out monetary tightening of the same magnitude. The European Central Bank is expected to announce the end of its asset purchase program on Thursday and prepare the markets for a rate hike in July. It will also present its new growth and inflation projections. Next week, the Fed is expected to announce another 50 basis point hike in Fed Funds.
“Investors, caught between uncertainty about growth, the persistence of inflation that never stops climbing and central bankers who have adopted a more offensive approach, have shown a very clear aversion to risk”, explains Patrick Guérin. The World Bank cast a chill by lowering its forecast for global growth to 2.9% this year from 4.1% previously, and warned of the risk of stagflation.