OPEC and its allied producers (OPEC+) have agreed to maintain their current oil-output targets despite a recent decline in energy prices. Oil prices showed no immediate reaction, which bode ill for the Norwegian Krone, economists at Commerzbank report. 

OPEC+’s long-term price setting scope seems limited

“In the run-up to the OPEC+ meeting there had been speculation that the oil cartel might decide in favour of raising oil production volumes. That did not happen, as we found out over the weekend. However, that is not good news for the Norwegian Krone as the price for Brent Oil reacted only very cautiously to these reports.”

“Long-term inflation expectations remain well below the peaks of the first half of the year, OPEC+’s long-term price setting scope also seems limited – at least if one assumes that the cartel will continue to play the role of a monopolist it used to play.”

“And if there is no significant reaction in the oil price then there is no reason to trade NOK at stronger levels either.”