Prestige's Schenker on OPEC Decision: Bearish for Price (Audio)

important events. Today. We've got Hillary Clinton, the presumptive Democratic nominee, giving him an important foreign policy speech starting momentarily where she's expected to attack Donald Trump on his lack of a foreign policy vision. And we're gonna be looking at the Opeque meeting today, no quota met downward pressure on oil prices. If supply weren't lower in the United States, oil prices might be falling more than they are. We're going to take a look at these and maybe even

tie them together in a few important respects. Now, let's tie it all together. We're gonna go to Charlie Pelton Issiam with a bloombig business flash, and I thank you very much. Kathleen Hayes plenty going on. We've got the jobs report tomorrow, but as you mentioned, we've got that OPEC meeting today. Crude oil now up eight cents forty nine O nine a barrel on West Texas Intermediate two

tenths of one percent. And also the ECB decision. ECB President Mario Draggy unveiling largely unchanged inflation forecast for the Eurozone even as its latest stimulus measures start to take effect. He also called on governments to play a bigger role in cementing the region's pick up. The latest data point to ongoing growth in the second quarter, though possibly at a lower rate than in the first quarter. Looking ahead, we expect the economic recovery to proceed at a moderate

but steady pace. The ten year of eight thirty seconds zeal there one point eight oh percent. Filings for US unemployment benefits to climb for a third consecutive weeks. Signalings sustained firming in the labor market, jovels claims down by one thousand. Tomorrow morning, eight thirty A on Wall Street Time, we get the all important May jobs report. Payrolls seen climbing by one hundred sixty thousand, the unemployment rates scene falling to four point nine percent, SMP five hundred index

up two point. Stocks are rebounding. The SMP now at one up by point one percent down, Industrials up twenty points, a gain of point one percent, nastack of eight a gain of two tenths of one percent, and at two thirty two on Wall Street. Now, let's take a look at other news from around the world. On Bloomberg Radio. Thank you Charlie from the Bloomberg News Room, my Ramie Innocentio.

Hillary Clinton has said to unleash a major foreign policy attack on Donald Trump at this hour, using a speech in San Diego today to cast the likely Republican presidential nominee as unqualified and dangerous. The former Secretary of State plans to contrast her foreign policy experience with his. Meanwhile, Hillary Clinton and Bernie Sanders are locked in a tight

battle in California. Clinton has a slight lead over Sanders forty to forty in a new Field Pole a New Wall Street Journal NBC News Maris Pole found similar results, with Clinton leading Sanders for the state's primary is Tuesday. The fallout continues from North Korea's recent missile tests. Bloomberg's Michael Barr has more. The U. N. Security Council is calling North Korea's failed missile launches flagrant violations. The Council

has strongly condemned the three latest launches. The council calls them a grave violation of a ban on all ballistic missile activity that's contributed to the country's nuclear weapons program. Michael Barr Bloomberg Radio more. What weather is on the way for Texas emergency official state the Brazos River is already four feet higher than its record and still rising. Donna Cheshire, who lives in Lubbick, says she's never seen

the flooding so bad. I've seen it bad when you know, in the cars would come and it would wash up in the yard, but never where it would get into the house. But it actually came in my house. And the New York City lawyer says the city's police force has thwarted numerous terrorist attacks, despite claims by some critics that its methods do not work. Global News twenty four hours a day, powered by our journalists in more than

one fifty news bureaus around the world. From the Bloomberg Newsroom, I'm Rainy in essentio Charlie and we thank you and again recapping stocks higher across the board. SMP five hundred index up two points to one again of point one. I'm Charlie Vllett and that's a Bloomberg Business flash. This is taking stock with Kathleen Hayes and Grim Box on Bloomberg Radio. OPEC is going to stick to its policy of unfettered production after members failed again to agree on

a new output ceiling. However, ministers are united in their optimism that global oil markets markets are improving, and the group was also able to appoint a news Secretary General, Nigeria's Mohammed Barkindo, something that couldn't agree on last year. Mr Barkindo gave some remarks today saying that the group is going to work to regain the unity it had had in the past and the confidence of the international community UH, saying that OPEC is making a comeback as

it overcomes temporary difficulties. Now he's in Vienna today, not only Mr Barkindo, but our next guest, Jason Shanker, president of Prestige Economics. He's based in Austin, Texas, but he's

joining us from Austria today where Opek met. So, Jason, what is your sense of the mood coming out of this putting the best face on the fact that they couldn't agree on a quota or is it is it true that the meetings were not rankers, they were a little friendlier and they're heading towards more of an agreement in the future. So I think it's both. So I

think the eating was less rancorous. It was described as you know, amenable and friendly and the sorts of things, and you know, it wasn't as it has been at past meetings where you have people kind of storm out of the meeting and that's not as good. But that being said, even though it was a more positive meeting, no production quota was adopted, No target was adopted. Uh

and UH. I know that the Saudis had worked very hard to put together what turned out to be quite a complicated proposal that they thought would make the interests of both Iran and Saudi and all the rest of the members, and yet it wasn't accepted and there's no production number. Again, So where will the price of oil go? Today? We've got West Texas Intermediate trading around forty nine dollars and change just slightly higher. So it has certainly hasn't

um taken a beating on this news today? Is the bottom in for oil now? Well, I think, you know, if we look back to where we were in January, I think that, yeah, I mean, we've come a long way since those loads in January, but that doesn't mean

that there aren't downside risks. And I'd say, if you wanted to assess where those risks are, I would probably be looking at industrial medals prices like copper or aluminum, or fair scrap prices, which, although we're stronger a couple of months ago, have taken a beating in the last six weeks um following a couple of very weak Chinese

p m I numbers. The schene Um just out on the first of the month out yesterday showed that Chinese manufacturing has been contracting for seventeen in the past eighteen consecutive months. That's a year and a half of a manufacturing recession in China's been going on, and that's thirty of their economy. So that's hurting medals and there's a risk as in the last two years, when the summer driving season ends uh, that oil prices could follow medals

lower regardless of a supply demand balance. Well, you know our Bloomberg story about keeping the status quo after feeling to cree on output cap said, the fact that oil has rallied about from the twelve year old January suggests the Saudi led decision a couple of years ago to maintain output amid a global glut, in fact maybe make it worse. It's finally paying off with higher cost producers cutting back. So I think, uh, that is partially true.

So that the um, you know, the the vet tolet prices, to to let go of the rudder and let the market kind of find its own way has paid off. Higher cost producers have been forced out of the market. More producers will be forced out of the market because fifty dollars isn't very profitable for some producers, and campex

has been cut significantly in the United States. Now that being said, while that has been good for OPEC market share, the prices are still low enough that this is problematic for a number of opaque economies even at fifty dollars. And if you look at some of the I m F growth forecast or some uh, pretty dis more growth

forecast for some OPEC members in the year ahead. And of course not all OPEC members operate on the same cost curve, so this is something that is uh yeah, it could could prove beneficial for OPEC providing oil into the market, but also hurts the profitability of some of those members. You know. A very smart fellow named Jason Shanker, Oh that's you, president of Stige Economics, also quoted this story.

The lack of oil production targets bears for prices because the hopes of ideal to increased in the past couple of days. Jason Shanker says, say goodbye to OPEX efficacy as united groups. So you don't think Mohammed Markendo is the guy to to pull this group strongly together again. I mean, is OPEC really over as the powerhouse of

the oil setting market oil price setting market. No, you know, I don't think it's over, and I don't think that the Secretary General is the one who should be uh, you know, really put to task with pulling the group together. It's uh, you know, I think it's unfortunate for the group that that there were attempts to try to have cohesion and it didn't come together. But after a couple of meetings where there's no production target, something that had

been in place for thirty five years. Uh, you know, I think markets look at this and they begin to wonder, Uh, you know, does OPEC still have a leadership role. There's not really a uniform set of decisions. What does this mean? Are they going to remain effective moving forward? Will things improve when Iranian production gets back to sort of pre embargo levels. Is that when there's going to be more of a negotiation. Those are the questions out there right now.

Jason Shaker, thanks so much for joining us. I hope you have a nice time in Vienna where Jason's been attending the OPEC meeting today. No output target met, he says, that is still bearish for oil prices. I'm Kathleen Hayes. This is taking Stock on Bloomberg Radio. Bloomber Taking Stock is brought to you by Willoughby since eighteen ninety eight, New York City's boutique camera store for precision craft at Hossile Blood and Like a Cameras, plus a full selection

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