Saudi Energy Minister Khalid al-Falih said on Wednesday OPEC was getting close to clinching a deal to limit oil output, adding it was fine for Iran to freeze production at pre-sanctions levels. The comments could be seen as a compromise by Riyadh, which in recent weeks insisted that Iran fully participate in cuts. Falih also said the Organization of the Petroleum Exporting Countries was focusing on reducing output to a ceiling of 32.5 million barrels per day. He added that even if OPEC failed to reach a deal, the market would slowly recover as fundamentals were moving in the right direction.
"I think we are looking at a very positive meeting," said UAE Energy Minister Suhail bin Mohammed al-Mazroui. His colleagues from Angola, Algeria and Nigeria also said they believed OPEC would reach a deal on Wednesday.
Documents prepared for Wednesday's meeting propose the group cut production by 1.2 million bpd from October levels. The papers also propose Saudi Arabia reduce production to 10.07 million bpd from 10.54 million bpd in October and that Iran freeze output at 3.797 million bpd.
Oil jumped more than 5% on Wednesday, after the Saudi oil minister said an agreement among OPEC members on cutting output was close. Higher oil prices supported the loonie.
The market shrugged off Canadian macroeconomic data yesterday. Canada's current account deficit narrowed to CAD 18.3 billion in the third quarter from a revised CAD 19.02 billion deficit in the second quarter as exports picked up. Canada's GDP data for the third quarter is due on Wednesday. The market expects growth of 3.4%, up from a 1.6% drop in the second quarter. But the reading may be overshadowed by OPEC meeting outcome.
We opened USD/CAD short position at 1.3415 today.
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