Commodities: Crude falls as concerns of lingering global glut come to the fore
By Andrew Schonberg
Date: Wednesday 22 Feb 2017
(ShareCast News) - Crude futures pushed lower Wednesday as some in the market took a view that the global supply glut of the black liquid is set to last a lot longer.
At 15:43 GMT, Nymex-quoted West Texas Intermediate crude was down 1.42% to $53.56 a barrel, while Intercontinental Exchange-priced Brent was down 1.38% to $55.88 a barrel.
"While OPEC seems confident that member countries will continue to stick to their production quotas, the offset continues to be the amount of inventory that US producers continue to build," said Michael Hewson, chief market analyst at CMC Markets UK.
"With OPEC reluctant to extend the quotas beyond the June meeting it is becoming increasingly obvious that, in spite of rising demand, the rise in inventories will ensure that the supply overhang is likely to last a lot longer."
On Comex, gold was down 0.15% to $1237.1 an ounce, with silver down 0.24% to $18.03 an ounce and copper faltering 0.63 cents to 274 cents a pound.
Oanda senior market analyst Craig Erlam noted that gold continued to show significant resilience in the face of dollar gains.
"Ordinarily, gold has a relatively strong inverse relationship with the dollar and yet it's trading near more than three month highs and has not been wounded by the dollar's rally in recent days," said Erlam.
"Instead it appears to have stabilised just shy of $1,250 which is the next big barrier to the upside."
FXTM research analyst Lukman Otunuga said that the visible fact gold continued to display resilience despite the dollar's resurgence highlighted how risk aversion in the background continued to keep the metal buoyed.
Sterling was mildly lower against the dollar, while the dollar-spot index made minor gains.
"From a technical standpoint, gold remains bullish on the daily charts and a breakout above $1240 could encourage a further incline higher towards $1250," Otunuga said in a statement.
On London Metals Exchange, three-month industrial metals were all lower, with aluminum and tin leading the way and followed by zinc and copper.
Among agriculturals, Chicago Board of Trade-priced corn was up 0.8% to 379.5 cents a bushel, with wheat up 1.11% to 454.75 cents a bushel.
ICE-quoted cocoa was up 0.1% to $1998 a MT, and cotton No.2 firmed 0.05% to 75.7 cents a pound. Live cattle rose 0.17% to 115.5 cents a pound.
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