OPEC strengthens oil

New cuts in oil production push up prices

WHAT HAPPENS
OPEC+, which also includes Russia, met last Sunday in Vienna and decided on new measures to contain oil production and therefore to support prices.
Among them, Saudi Arabia announced the voluntary reduction of 1 million barrels per day until the end of June, which represents about 2.5% of the total supply, but - more importantly - said that from July onwards it will act according to the circumstances and, therefore, will cut production again if the oil price turns out to be particularly low.
The Saudi Finance Minister had said that $80 per barrel is an indispensable minimum price for the country and had warned speculators not to sell oil short by aiming for price drops.

WHAT TO EXPECT
Referring to American data, some economists have produced empirical evidence relating to the relationship between the stock market cycle and the interest rate structure.
They found that the stock market does not start a new recovery cycle until the spread between the ten-year rate and the two-year rate returns positive and exceeds at least the threshold of +1.40%.
Since rates look to the future, this return of the yield curve to an increasing structure by maturities could also take place during the recession phase to the extent that market operators see a glimmer of economic recovery.
All this offers us a different angle to consider it still premature to return to investing in a generalized way in equity indices.