A clear break of the $52.00 per barrel (bbl) level for WTI futures was seen this morning with prices trading at $54.00/bbl when last checked at 8am (Singapore time). Strong assist came from Saudi Arabia despite the fact that the non-OPEC countries will only be shouldering a cut of 558,000 barrels per day against the earlier expectation of 600,000 barrels.
This is nevertheless the first agreement outside of OPEC members since 2001, signalling the commencement of a more collective effort to end the oil rout. OPEC’s largest producer, Saudi Arabia, announced after Saturday’s meeting that the country will slash production beyond the level previously agreed with OPEC.
The country is also preparing a partial flotation of its crown jewel in 2018, the state-owned oil company Saudi Aramco, and that certainly serves as an incentive for the oil giant. At present, the optimism has certainly outweighed concerns of non-compliance with WTI futures prices at the highest since February 2015.
Early movers in Asia including the Nikkei 225 and KOSPI were found in moderate black early morning, 8.30am (Singapore time). Notably, the Nikkei 225 inched up to a near 1-year high of 19,183.82 at the open with the strong leads over the weekend. Better-than-expected October machine orders data also boosted the outlook for the economy alongside the highest producer price index seen since April 2015 in month-on-month terms.
The highly watched South Korea market, KOSPI, saw prices perk up as well from the improvement in external sentiment after markets closed ahead of President Park Guen-hye’s impeachment vote last week. Due concerns have been paid to the volatility that could stem from the stepping down of President Park, though as ratings agency S&P assured, ratings have not been materially affected by the latest development. South Korean finance minister have also reassured that the government will do “everything” to ensure the economic stability, allaying some concerns at the start of the week.
The day ahead will have markets looking to Japan’s October tertiary industry index and November preliminary estimate for Japan’s machine tool orders. A number of data releases including China’s November foreign direct investments, aggregate financing, M2 and new yuan loans would also be due between today and Thursday.