Commodities: Crude makes moderate gains as Opec pledge chatter swirls
By Andrew Schonberg
Date: Monday 08 May 2017
(ShareCast News) - Crude-oil futures turned in moderate Monday gains as market chatter about Opec and non-Opec countries mulling output freezes ahead of the cartel's May meeting failed to light a fire under the black liquid's prices.
Opec made a production pledge late last year amid a global supply glut and, since then, the market has been rife with speculation on whether it would be extended, or not. The supply glut continues, with US shale production continuing.
At 15:15 BST, Nymex-priced West Texas Intermediate crude was up 0.71% to $46.55 a barrel. Intercontinental Exchange-traded Brent was up 0.67% to $49.43 a barrel.
"Speculation that Opec and non Opec members are considering extending the output freeze into 2018 has failed to materially lift oil prices," said Michael Hewson of CMC Markets UK.
This, the chief market analyst said, was despite Friday's late rebound.
"Another increase in US rig counts merely serves to highlight the scale of the task for Opec in trying to underpin prices," he added.
"If markets thought that getting an agreement for the remainder of the year was likely to be a big ask, then extending it into next year is likely to invite further scepticism."
FXTM vice president of market research Jameel Ahmad opined that investors should prepare for the unexpected when it comes to Opec meetings, such as that on 25 May.
"Basically what this could come down to is whether Opec and non-Opec members are willing to lose face by accepting defeat to (US) Shale in return for a further boost in revenue, or are they committed to prolonging their participation in this ongoing production war with Shale?"
Meanwhile, on Comex, gold was ahead 0.22% to $1229.6 an ounce. Silver rose 0.07% to $16.29 an ounce, and copper shed 1.8% to 248.30 cents a pound.
Mike van Dulken, head of research at Accendo Markets, said gold's bounce has found resistance at $1235.
On the London Metals Exchange, three-month industrial metals were mixed. Tin fell 1.39%, aluminium shed 52%, copper rose 0.76% and zinc added 0.51%.
Hewson added that a disappointing China imports number in April sent copper prices to a four-month low, while iron ore prices also came under pressure, as pessimism over future demand continued to weigh on prices.
"Another slide in iron ore prices has weighed on this sector, hitting their lowest levels since October last year, sending Antofagasta, Glencore and Anglo American to the bottom of the FTSE 100," he said.
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN