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Daily Agenda: Oil Markets Rally Ahead of Producer Summit

Russian oil minister affirms caps, sends markets higher; U.K. inflation rises; Rouseff impeachment clears committee; Alcoa beats estimates.

On Tuesday, Russian Energy Minister Alexander Novak publicly stated his nation’s willingness to agree to new production caps for oil and gas ahead of the planned summit of global producers in Doha on April 17. Russia, the third-largest producer of oil globally, has faced a severe drain in government coffers since the slump in crude-oil prices began in 2015. The possibility of cooperation between the Organization of Petroleum Exporting Countries and non-member states to drive prices higher helped push front-month contracts for Brent-grade crude to multimonth highs above $43 per barrel in trading in London, producing a sympathetic equities rally. Investors must now consider how powerful an OPEC bolstered by Russian support can be in defending price levels with North American production remaining near post-World War II highs and the reintroduction of Iran into export markets.

Inflation rises in UK. Consumer inflation data released on Tuesday by the British Office for National Statistics revealed that prices rose significantly in the U.K. during March, in part due to seasonal inflections. While the headline-price index rose by 0.5 percent, year-over-year core prices climbed 1.52 percent. Separately, producer prices rose sequentially for the month with the headline index registering a contraction of 0.9 percent versus March 2015.

Rousseff impeachment moves forward. On Monday, the impeachment committee for the Chamber of Deputies of Brazil voted in favor of proceeding with impeachment proceedings against President Dilma Rousseff. While the expanding scandals involving state-controlled energy and power companies have been at the center of the controversy, the impeachment proceedings are underpinned by specific charges related to abuse of power by the administration. The impeachment proceedings will now move to a vote by the full lower house.

Alcoa beats estimates. Financial results for the first quarter released by metals producer Alcoa on Monday registered profits that exceeded consensus analyst forecasts. Despite a year-over-year decline in top line revenues of more than 15 percent, the New York company still reported earnings of $0.7 per share. The company will continue with plans to split into two separate firms in the coming quarters.

Nomura back away from European operations. Japanese banking giant Nomura will restructure its investment banking operations in Europe according to a report by Bloomberg on Monday. The move, which will effectively shutter the bank’s equity business in that region, comes as part of a move by the company’s management to streamline global operations and reduce risk.

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