Commodities: Oil prices continue to froth on Opec curb hopes
By Digital Look
Date: Monday 22 May 2017
(ShareCast News) - Crude-oil futures began the week as they left off on Friday, frothing higher on market hopes of Opec extending its output curbs when it meets later this week.
At 15:20 BST, Nymex-priced West Texas Intermediate crude was up 0.97% to $50.82 a barrel. Intercontinental Exchange-traded Brent added 0.91% to $54.10 a barrel. Around the same time, the dollar-spot index was down 0.34% to $96.809.
Opec is due to meet in Vienna on 25 May, and traders have pushed the price of crude higher in anticipation the cartel will extend its production pledge by nine months and into 2018.
Support has been identified broadly around the $49.75 level, with solid resistance at about $53/55.
"Some investors remain sceptical about the Opec's ability to reduce the global oil supply," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
"In fact, Opec exports fell visibly less than the production in the first quarter of 2017, Ozkardeskaya added.
"Combined to the stagnating global demand, the Opec and Russia are somewhat swimming against the stream."
Naeem Aslam, chief market analyst at ThinkMarkets UK Ltd, said it remained to be seen how far Opec would go on Thursday.
"The markets have priced in an extension of the oil production cut beyond this year, but with headlines emerging on a daily basis in the run up to the Opec meeting, oil traders are off staying on the watch for volatile trading conditions.
"In our eyes, Opec is not the superpower it used to be and it is the US shale oil producers who changed the game. We said it before and we are sticking to our guns."
Meanwhile, on Comex, gold was up 0.41% to $1258.7 an ounce. Silver rose 1.78% to $17.10 an ounce, and copper gained 0.14% to 258.50 cents a pound as the US dollar continued to beat a retreat.
"With political unrest in Washington hastening the flight to safety, investors sprinted to Gold as a form of protection," said FXTM research analyst Lukman Otunuga.
Contributing to losses in the greenback, speaking early on Monday afternoon German chancellor Angela Merkel said the European single currency was "too cheap".
"The yellow metal is in the process of turning bullish on the daily charts and a vulnerable Dollar should inspire bulls to conquer $1260," he said.
"From a technical standpoint, a breakout above $1260 may open a path higher towards $1275."
On the London Metals Exchange, three-month industrial metals were ahead. Zinc was up 3.28%, copper added 1.83%, aluminum firmed 1.07% and tin rose 0.99%.
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