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Afternoon analysis 24.08.2016

, author:

Marcin Lipka

New information from the oil market increases volatility on this raw material. The South African rand lost 5% value during twenty-four hours. The zloty is stable against the euro, as well as the franc. The pound costs more than 5.06 PLN.

It's still worth following the WTI and Brent quotations. This is despite that the current oil quotations have a lower impact on currencies of the raw-material-exporting countries, as well as the general sentiment, than they did at the year's beginning.

The past hours, as well as days, were a series of dissonant signals for the oil market. Yesterday afternoon, Reuters published an information that Iran will participate in the OPEC meeting in Algeria. This would suggest an increase in probability of freezing the mining at a specific level by the Cartel. The fact that Tehran didn't join the countries that would limit their production in the first half of the year, has been considered as the main reason for the lack of a larger coordination in stabilizing the supply level.

This caused the WTI prices to go from 46.80 to 48 USD per barrel quite fast. However, we received a weekly API report about supplies of oil and its products in the USA in the evening. It's not always consistent with the official EIA data, but it's a certain introduction to Wednesday's readings from the Energy Department.

According to the API, oil supplies increased by 4.46 million barrels. Bloomberg's estimations median regarding the EIA data, assumed an 850k barrels decline. Therefore, the difference between the forecasts was large enough to cause a significant reduction of previous growths, as well as a decline of the WTI by 47.50 USD per barrel.

This morning it appeared that according to the spokesperson of the Iranian oil ministry, the decision regarding the country's participation in the Algerian meeting has not been made yet. This, as well as a slight increase in the American currency, caused the WTI quotations to withdraw near the 47 USD level in the early afternoon.

We may expect some further speculations regarding hypothetical actions of the oil producers until the summit in Algeria on the 26-28 of September. The short-term changes will be generated by weekly supply data from the USA as well. However, the current levels can be assumed as the base case scenario. If agreement is not achieved in Algeria and the supplies continue to grow fast in September and October, there may be an attempt of another decline below the level of 45 USD per barrel.

Weak rand and stable zloty

The second half of the year was favorable for the South African rand. The RSA has been increasingly further from the rating downgrade to speculative level due to a rebound in the raw material market. However, the most recent hours have been less favorable for the rand.

The USD/ZAR increased approximately 5% due to information regarding a possibility of dismissal of the minister of finance that was cited by Bloomberg. Political instability may cause the return of the discussion regarding the RSA loan credibility.

On the other hand, the zloty is relatively stable. The euro, as well as the franc, didn't visibly change their values against the Polish currency during past few hours. However, the pound is continuing its appreciation in the global market, as well as against the PLN. This is causing the pound to cost more than 5.06 PLN.


This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without the written permission from Cinkciarz.pl Sp. z o.o is prohibited.

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