The Day at a Glance | June 1 2021

The Top

*Oil prices reach their highest levels in two and a half years, prior to an OPEC+ meeting.

*Inflation in Europe records 2% annual growth for the first time since 2018; the rise continues to be expected to be temporary (underlying inflation 0.9%).

*Manufacturing PMI in Europe was revised upwards (63.1) and logged a new record level of expansion.

*Economic indicators: Manufacturing ISM is expected to be made public in the US (60.9 e.).

Economic environment

OPEC+ will hold a meeting today to decide on the global supply of crude oil. Members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) will carry out their monthly meeting today to discuss the future of global crude oil production cuts. According to recent reports made by the organization`s investigative committees, the oversupply of crude oil created by the pandemic has passed, and inventories are expected to drop quickly in the second half of the year: OPEC+ forecasts that crude oil inventories could drop at a rate of 2 million daily barrels between September and December. It`s believed that this will allow OPEC+ to announce an increase in production starting in July since the robust economic recovery seen in the United States and in Europe have given the organization`s members confidence that the energy market will be able to absorb additional barrels. Among markets, international oil prices have reached their highest levels in two and a half years, and some consider that they could continue to increase up to $75-80 dollars per barrel. This will largely depend on the progress made in the negotiations of a new nuclear pact with Iran, which will occur in Vienna. If major world powers successfully reach an agreement with the Arab country for it to stop its nuclear program, sanctions placed on the country would be lifted and production of Iranian crude oil could once again be supplied in global markets, something that could limit the rise in prices of crude oil. The most recent reports suggest that the Iranian government expects to reach an agreement in August and that, in any case, the reinsertion of the country`s production in the global market will be gradual; however, if the agreement allows Tehran to resume the exportation of crude oil more quickly, prices could record a smaller increase.