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Following the recent rise towards $80 /b barrel in Brent crude, oil prices are set to remain in the headlines in the week ahead, according to analysts at Rabobank.

Key Quotes

“The St. Peterburg International Economic Forum will bring together Russian and Saudi energy ministers and a host of world leaders including Russia’s Putin, France’s Macron and Japan’s Abe. The market will be watching for any sign that Russia could be enticed to pump more oil and for signals regarding the degree of support for Iran.   Following the pulling out of the US from the 2015 Iranian nuclear deal, Tehran has vowed to uphold its commitments in the pact if the EU can offset renewed US sanctions.   Given the US’s threat on EU companies if they continue to trade with Iran, the EU faces an unnerving dilemma.”

“Wednesday  will bring the release of the minutes of May FOMC meeting. The statement that followed the meeting brought a slight change in the language on inflation.   It noted that the Fed’s inflation target is “symmetrical”, which triggered speculation that policy makers could be comfortable with a modest overshoot of inflation about target.”

“Investors will look for any further subtle clues in the minutes in order to capture the mood of policy makers.   The Fed has signaled that rates are likely to be raised a total of three times this year, though there has been plenty of speculation in the market that policy makers could be persuaded to hike rates by a total of four times.   Fed dove Kashkari has written an article for the FT today which outlines his concerns on the lack of wage inflation.”

“Brexit negotiations will start again  on Tuesday. Last week the cabinet agreed that the UK could remain tied to a customs union with the EU after 2021.   This is related to the difficulty in finding an alternative solution to a hard border across the island of Ireland post Brexit amid reports that the technology that would be needed to provide a frictionless border is not yet in existence.     Political uncertainty has shaken the pound in the past few session, though EUR/GBP is holding below its May highs.”

“The closure of much of Europe today for a holiday can be expected to result in a subdued start to the week. The data calendar will bring the Chicago Fed’s activity index today and includes preliminary US manufacturing PMI data later in the week.   PMI data also feature on European calendars this week in addition to Germany’s IFO index and UK CPI inflation and retail sales.  The week will bring several speakers from the Fed and the BoE, including an address by Governor Carney.”