OPEC deal within sight

The FTSE has enjoyed a positive start, with OPEC members clearly indicating that a deal is within their grasp says Joshua Mahony, market analyst at IG.

OPEC deal within sight

The FTSE is starting the day in rude health, as the rising chance of an OPEC output cut has driven energy firms into the green.

Despite starting the day on a gloomy tone, with RBS failing the BoE stress tests, it seems that markets are willing to focus on the positives, with rumours of a crude cut that could surpass expectations. Despite a possible pass for the likes of Iran and Libya, the group clearly has aspirations to enact a significant cut, which could even include the likes of Russia.

Today was always going to be all about OPEC and early signals are that we will not be disappointed, with crude prices gaining almost 6% off the back of speculation that a deal will finally come to pass. Despite differing views emerging from Vienna, one recurring theme is that OPEC members are very close to agreeing a deal to curb output, with concessions for the likes of Iran raising the possibility of  a deal that manages to please most members.

Should we see an agreement today, it would represent one of the most important days for oil markets in years, with the Saudis essentially abandoning their attempts to push out US producers from the market. The decision to leave it to the markets has clearly been a disaster for OPEC members who have been long reliant upon oil revenues to prop up their economies.

After years of austerity and budget deficits, could today mark the day when OPEC says enough is enough?

Ahead of the open we expect the Dow Jones to open 14 points higher, at 19,136.

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