Focus of the week is OPEC's meeting in Vienna on May 28. Over the weekend, Saudi Arabia Oil Minister Ali al- Naimi said that the organization will likely 'stay the course' at this meeting. When commenting about OPEC's compliance, Naimi said he's fine with the current level. Libya, another OPEC member said there's still 50% for a production cut in May.
We think it's unlikely for the OPEC to another a further output reduction at the upcoming meeting as oil price has stabilized since the previous meeting in March. In fact, oil price has risen almost 30% since then and is still trading with upside momentum. OPEC will probably find it less motivated to implement further cut at the moment particularly when some members still have rooms to improve their compliance while economies of some member countries rely heavily on oil exports. Last month, both Algeria and Qatar said that they can tolerate a price of 50/bbl, lowered from the previous informal target of 70/bbl.
Crude oil price trades narrowly around 61/62 in Asian morning as investors await more important data to be released later this week. Trading is expected to be light throughout the day due to holidays in the UK and the US
Gold price retreats after rising to 2-month high at 964.6 Friday as USD rebounds against the euro and other major currencies after the sharp fall last week. However, weakness in USD should help resume recent rally after consolidation.
The previous day gold Price was set in London at $959.75 per ounce inclining from $952.50 per ounce during the AM fixing. Also, SPDR gold trust, the world's largest exchange-traded fund backed by bullion, rose to 1,118.76 metric tons on May 22
Spot gold is now traded at $953.05 from Friday's closing of $957.50 despite North Korea's nuclear test conducted on Monday which enhanced demand on safe-haven assets such as yen and dollar. However, gold market ignored the news as the metal is overbought which induced some investors to take short positions taking advantage of the high price reached. Today is a public holiday in the U.S. and U.K. which is also lowering the volume in markets.
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