(REUTERS/Kyodo)
Residents waiting for rescue helicopters at a residential area flooded by the Kinugawa River, caused by Typhoon Etau, in Joso, Ibaraki prefecture, Japan, in this photo taken by Kyodo on Thursday.
Here is what you need to know.
The IEA is forecasting a huge drop in oil supplies outside OPEC. The International Energy Agency thinks the drop in oil prices will cause the biggest decline in oil supplies outside the OPEC cartel in more than two decades. The IEA says oil supplies will fall by about half a million barrels a day because of lower output in the US, Russia, and North Sea. "US light tight oil, the driver of US growth, is forecast to shrink by 0.4 mb/d next year," the IEA says.
Goldman Sachs thinks oil prices could be headed a lot lower. Global commodities research head Jeffrey Currie says that while it's not Goldman's base case, oil could fall to as low as $20 a barrel. According to Currie's latest note, "The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth, with risks skewed to even weaker demand given China's slowdown and its negative EM feedback loop." In its most likely scenario, Goldman sees $38 a barrel in a month and $45 a barrel in 12 months. West Texas Intermediate crude oil is trading lower by 2.4% at $44.79 a barrel.
Russia's central bank held policy steady. The Central Bank of Russia kept its key interest rate unchanged at 11.00%, as expected. Friday's meeting marked the first time all year the central bank left rates unchanged as it looks to navigate the Russian economy out of recession. The central bank said, "Inflation and inflation expectations were showing a clear upward trend, impacted by the exchange rate dynamics." It continued, "The depreciated ruble will continue to put pressure on prices in the next few months." The central bank believes that going forward the economy's fate will be determined by oil prices and its ability to withstand external shocks. Russia's ruble is weaker by 0.6% at 68.0955.
The Bank of Korea kept policy on hold. South Korea's central bank held its benchmark interest rate at 1.50%, as expected. The central bank noted "although the recovery in domestic demand activities such as consumption and investment has continued, the trend of declining exports has persisted while the improvement in economic agents’ sentiments has been inadequate." South Korea's won ended stronger by 0.8% at 1,184.46 per dollar.
New loans in China slowed. Chinese banks loaned 809.6 billion yuan in August, missing the 850 billion yuan that economists were anticipating. The number was well shy of the 1.48 trillion yuan that was loaned during the prior month. The China's M2 money supply increased 13.3% versus the prior year, slightly outpacing estimates. China's yuan ended little changed at 6.3749 per dollar.