(March 24) – With the current round of interest rate hikes in the bank and a rather quiet data week ahead, traders and economists are looking toward Monday’s OPEC meeting as the next big event.
Analysts at CIBC World Markets expect next week could bring an uptick in inflation expectations. It isn’t anticipating much relief from OPEC, but is expecting to begin seeing the results of near-record-high oil prices in the next round of inflation numbers, with headline inflation reaching the Bank of Canada’s 3% ceiling.
CIBC says it’s expecting the market to be disappointed by OPEC. Some are calling for a production increase of 2 million barrels per day. CIBC calls this highly unlikely, particularly after comments from Iran suggesting that nation doesn’t want any output increases. It expects a price spike over US$35 per barrel after the market is disappointed and the summer driving season begins.
Merrill Lynch remains among the optimists, calling for a 1.5 million bbl/d increase from OPEC, with increases from non-OPEC Mexico and Norway thrown in for good measure. It foresees upward price pressure if the boost is less than 1 million bbl/d, and says the market really needs 2 to 2.5 million bbl/d to bolster inventories. If nothing else, Merrill expects the results to be good for oil producers.
Nesbitt Burns Inc. is too preoccupied with marvelling at the new economy to make a call on the OPEC meeting. But in the long run it remains optimistic about the impact of oil price rises and interest rate hikes in engineering a soft landing for markets.
-IE Staff