Will OPEC increase oil production in response to Russian supply disruptions?

In the oil market this week, all eyes were on OPEC’s next ministerial meeting on Thursday, after G7 leaders called on the producer group, led by Saudi Arabia, to boost output to make up for the damage caused by Russia’s invasion of Ukraine. .

U.S. has been pressuring Saudi Arabia and other OPEC members Increase production But the G7 announcement has upped the ante since September. So far, members of the OPEC+ alliance, including Russia, have stuck to a plan agreed last year to only gradually replace output cuts at the start of the pandemic.

But OPEC’s case for business-as-usual is waning as analysts predict an intensifying international boycott will force Russian output to fall by as much as 3 million bpd from April. Analysts at Standard Chartered wrote in a note that if OPEC members concede that Russian output could fall sharply, “there are few advantages and multiple disadvantages within the current OPEC+ agreement.”

Whether OPEC can significantly increase production is another matter. The group has been falling short of its current production increase of 400,000 barrels per day and OPEC’s target. idle capacity Estimates are now down to 2-3 million bpd, mostly in Saudi Arabia and the United Arab Emirates.

At the Financial Times Commodities Summit in Lausanne last week, top oil traders, including Doug King, head of the RCMA Commercial Commodities Fund, argued that even those low spare capacity figures were exaggerated and that Saudi Arabia insisted the OPEC+ deal was Because it doesn’t provide more barrels.Kim predicts that Brent crude, which is trading around $116 a barrel on Friday, will surge to $200 and $250 per barrel This year. Tom Wilson

Will the U.S. economy post its third month of strong job growth?

U.S. payrolls expected to rise again in March, third month of big gains, albeit at a slower pace than February

A closely watched Labor Department report on Friday is expected to show 488,000 jobs were added in March, while Feb 678,000the unemployment rate fell again, from 3.8% to 3.7%, according to a Bloomberg poll of economists.

The U.S. jobs report in recent months has beaten expectations by a wide margin: February’s report is expected to add 400,000 jobs.Also recorded in January surprise jump New payrolls and upward revisions to November and December data came despite an increase in Omicron cases.

The report will be the first since the Fed rate hike At its March policy meeting after cutting it to near zero at the start of the pandemic. At the meeting, the Fed’s forecasting mechanism, known as the “dot plot,” also showed that officials, on average, expect to raise rates at each subsequent meeting this year.

A weak report could raise questions about the U.S. economy’s ability to withstand the slowdown that usually accompanies rate hikes, while a strong report could signal persistent inflationary pressures in the labor market. Kate Duguid

Will Eurozone Inflation Hit New Highs?

Inflation in the euro zone is expected to surge further in March from a record high of 5.9% hit last month.

Economists polled by Reuters forecast consumer price growth to accelerate to 6.5 percent when preliminary estimates are released on Friday. Core inflation, which excludes volatile food and energy prices, is expected to jump to 3.3% from 2.9% the previous month.

That means headline inflation will more than triple the ECB’s 2 percent target, and a surge in energy prices following Russia’s invasion of Ukraine suggests further acceleration in the coming months.

Higher inflation is largely expected to come through more expensive energy costs, but other factors are also expected to play a role. After the war, the prices of agricultural products and fertilizers, with Russia and Ukraine as their main suppliers, also rose sharply. “Based on past evidence, we estimate this will significantly increase food inflation in the euro area in about six months’ time,” said BNP Paribas economist Paul Hollingsworth.

As a result, Hollingsworth now expects headline inflation to peak at 7.4% on average in the second quarter, pushing the annual rate to 6.7%. The latter was higher than the 5 percent forecast before the war.

Economists are closely watching for signs of a wage inflation spiral, in which rising wages for workers lead to more persistent domestic price pressures. Hollingsworth said there had been “little evidence” of strong wage growth so far, but added, “it’s just a matter of time.” Valentina Romee