The MasterTrader eBook(R). Your Complete Guide To Active Trading
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Author: Gary Duncan UK Times.
--OPEC has no plans to increase production this year. However, as we reported last week, Saudi Arabia is planning a new 400,000bpd refinery for heavier crude oil near its existing facility at Ras Tanura. OPEC clearly thinks the market is well-supplied, but would like to increase production capacity a bit more.
--Will the Gulf Cooperation Council (GCC) say anything about its US dollar peg? There are six nations in the GCC; Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Oman, and Kuwait. Kuwait dropped its dollar peg in May of this year, tired of importing inflation by following Ben Bernanke's interest rate policy.
--According to Bloomberg data, Saudi inflation is running at 4.9% a year, while the UAE copes with 9% inflation and Qatar deals with inflation of 14.8%. The falling greenback has led to soaring import prices in GCC countries.
--Don't feel too bad for them. Oil revenues for the year are incredibly high (US$200b in Saudi Arabia, US$60b in the UAE, and US$19b in Qatar.) But in countries where everything BUT energy must be imported, the dollar peg is highly inflationary. So why not shed the peg?
--The dollar's recent rally will have helped take the pressure off for a complete de-pegging at this week's meeting. And for a move with such large consequences, you'd expect the GCC nations to make the move first and announce it later. No point in telegraphing your intention to buy more euros and gold and sell the dollar.
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