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Euro suffers worst month against the pound since financial crisis

Political risks are still all the rage in the currency markets. The euro has suffered its worst slump against the pound since 2009 in November, as investors hone in on a series of looming battles between eurosceptic populists and establishment parties at the ballot box. The single currency has shed 4.5 per cent against sterling […]

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RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

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China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Categorized | Currencies

Oil climbs as Iraq poised to cut production

Posted on November 23, 2016

Oil prices rose on Wednesday after Iraq’s prime minister said the Opec producer was willing cut some of its own production, smoothing the way to a supply deal when the 14-member cartel meets in Vienna next week.

Haider Al-Abadi said Iraq would “shoulder responsibility” for some of the planned reductions of the group’s output to bolster the oil price, according to comments carried by Reuters.

The price of Brent crude, the international benchmark, increased 20 cents to $49.28 a barrel – off an earlier low of $48.56 a barrel. West Texas Intermediate, the US marker, rose 25 cents to $48.27 a barrel, from a low of $47.40.

A preliminary agreement was reached in September in Algiers to reduce output in an effort to speed the end of a two-year old supply glut and bolster prices, but some crucial details, including individual country allocations, are still to be ironed out ahead of the meeting on Wednesday.

Over the past several weeks Iraq has proved to be an obstacle to any final deal. It has questioned the figures from which any production cut will be calculated and believes it should also be exempt – like Libya and Nigeria – after years of war.

While Mr Abadi’s comments were light on detail, they have raised the chance of Iraq consenting to cuts and supporting an agreement to reduce output next week.

Iran, which will not cut but freeze production as it recovers after years under western sanctions, has also disputed numbers used to calculate its own production. Opec kingpin Saudi Arabia has indicated it may be willing to give Iran some flexibility but still wants it to agree to at least some restrictions.

Separately the US department of energy said crude stockpiles unexpectedly fell last week by 1.3m barrels, compared with analysts’ expectations for an increase of 671,000 barrels. Stocks at the Cushing, Oklahoma, delivery hub dropped by 87,000 barrels, the Energy Information Administration said.

Strength in the dollar weighed on dollar-priced commodites, however, with the US currency hitting a new 13-year high against a basket of currencies.