The atmosphere was far more upbeat at this year's International Petroleum Week, given the sharp oil price increase since the previous IP gathering, with levels now considered healthy for the industry. Expectations are divided between three views: 1) the market will continue to trend toward USD 65 per barrel, which is the long-term cost trend and also the acquisition policy of many companies; 2) fall back to the marginal cost of production at USD 50, balancing around inventory held; or 3) hover between the two depending on the strength of one's belief in the first two views. Few believe in oil breaking out of this price range in the short to medium term, so OPEC has clearly given the industry some time to breathe. However, the short-lived price recovery is already in danger as OPEC and Russia fail to deliver on agreed cuts and as US shale oil roars back to life.
• Marknaden tror inte på en amerikansk räntehöjning i mars
• Ingen ytterligare kronstyrka kortsiktigt
• Japansk finansminister antyder gräns för yen-försvagning
- Brexit story will not be repeated in France
- EURSEK: Corrective increase still in play
- EURGBP: GBP will hold up near term
- USDCNY: Authorities still control the CNY
Macroeconomic view challenges Riksbank's staying power
There is currently an abundance of strong macroeconomic data. In our view, we are seeing the effects of the relaxed monetary policy of recent years feeding through to the economic system. A wave of upward revisions to GDP forecasts will be seen in the near future (Figure 1).
Swedish data is also coming in strongly; for example, the Swedish labour market appears to be increasingly tighter. The January inflation rate fell back compared with December, which was expected. Our view is that this does not change the trend toward increasing inflation during 2017. Despite this, the Riksbank is indicating that a reduction in the repo rate is more likely than an increase. Policy errors made during 2010 and 2011 are still in recent memory and are curbing the will for tighter monetary policy.