Sell-Off Ramps Up ahead of OPEC
• Investors head for the hills, as Crude and indices plummet
• OPEC meeting unlikely to help Oil prices
• Volatility expected to rise as risk events come thick and fast
June has started with less of a bang and more of a pop today, as investors were sent packing towards havens and away from the risk assets that have been so reliable of late. The raft of high profile events that casts a shadow over this week was always likely to drive significant volatility, yet today’s sharp sell-off will have caught many by surprise.
Yesterday’s comments from the UAE minister paved the way for today’s sharp devaluation in Crude prices, with his optimism highlighting the fact that the Saudis are unlikely to face much opposition this time around. It is clear that the US is finally beginning to feel the pinch, with Crude output falling steadily. However, amid rising output elsewhere and a highly nimble shale industry, there is a good chance that just when prices recover, so does production. In that sense, the days of $100 a barrel could be behind us.
Today’s economic releases were largely dominated by the manufacturing sector, which for the likes of the UK and US are not necessarily a make or break sector for growth. However, tomorrow is a different beast, with OPEC, ECB, Carney, Crude inventories and UK construction all under the microscope. It is clear that while today seems to have been a particularly volatile day, this could just be the beginning.