Article / 28 September 2016 at 11:29 GMT

Mid-session Europe: Oil circles $45/b ahead of crunch talks

Saxo Markets


Foreign exchange
Oil watchers await a double whammy this afternoon with Opec's meeting on the sidelines of the Algiers conference at 1400 GMT followed quickly by the weekly oil inventory stocks report from the EIA.

Hopes for a deal have drifted as the enmity between kingpin Saudi Arabia and Iran looks to big a gap to bridge on any oil production freeze/cut deal but this is by no means cut and dried.

Elsewhere, Deutsche Bank moved to ease concerns by announcing it will sell its Abbey Life insurance group sending the stock up more than 3% fuelling a partial rebound in the banking segment.


  • US MBA Mortgage Applications                       (1100 GMT)

  • US Durable Goods Orders                                (1230 GMT)

  • Opec meeting at Algiers                                    (1400 GMT)

  • EIA energy stocks release                                 (1430 GMT)

Forex developments

FX markets have traded without any clear trend in terms of risk sentiment. USD has seen some buying interest with several Fed speakers, the Opec meeting at Algiers and European Central Bank's Mario Draghi giving testimony all on the horizon.

EUR has traded with the European banking sector at the forefront and is slightly softer on the day.  Draghi speaks today at the European Affairs Committee on monetary policy and the EU economy so that could trigger some
EURUSD reactions.

Bank of Japan governor Haruhiko Kuroda’s comments weighed on USDJPY as markets suspect that the new policy framework will lead to more tightening.

FX Options volatilities

Range trading around strikes is dominating today. EURUSD 1.12 strikes are the focus and 1.30 strikes in GBPUSD. Tomorrow there is a good amount of 1.31 strikes expiring in GBPUSD.

USDJPY three-month to one-year are still dominated by buying interest, while overnight to two-months is dominated by sellers.

Daily ranges are still very limited, and with equities trading positive today, selling interest will continue in the front end on all major pairs.

Fixed income




European stocks turned positive today to send FTSE 100 up 0.9% to 6,866 while DAX 30 advanced 1.2% to 10,487 and CAC 40 gained 1.1% to 4,448.

Equity markets are primarily oil driven as ol companies rose ahead of the closely.watched Opec meeting in Algiers where a more definitive plan to curtail output that has suppressed prices for two years could emerge. WTI crude was up 0.5% which helped fuel optimism over Europe’s commodity companies. Total SA was up 1.1%, BP rose 1.1% and Repsol was 1.3% higher.

Deutsche Bank gained 3.3% after the struggling lender reached a deal to sell its Abbey Life insurance business to Phoenix Group for €1.09 billion ($1.23 billion). DB’s rebound fuelled gains for the entire sector, with shares of Banco Santander up 1.4%, BNP Paribas SA rising 1.3% and Commerzbank 1.4% higher. Still in the banking sector, RBS rose 0.9% after the bank agreed to pay $1.1 billion to a US regulator to settle two lawsuits related to mortgage-backed securities. The charge was within the amount RBS set aside in provisions.

Other movers were Tui AG shares which gained 2.8% after the travel operator said it was confident of delivering between 12% and 13% growth in underlying earnings for the year that ends September 30. Deutsche Post also added 1.1% after the courier company said it is buying UK Mail Group for £242.7 million ($315.5 million). Eventually, Anheuser-Busch InBev were halted for trade ahead of a shareholder meeting to approve its $100 billion-plus megamerger with rival SABMiller. SABMiller shares were up 0.2%.


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Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.

Opec will try to knock Saudi and Iranian heads together this afternoon, but the respective parties look to be drifting up that lovely Algiers creek without a paddle. Photo: iStock

— Edited by Martin O'Rourke

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