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Oil Retreats Below $47 Before OPEC Meeting as Metals Snap Rally

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  • Oil Retreats Below $47 Before OPEC Meeting as Metals Snap Rally

Oil retreated back below $47 as OPEC members failed to bridge their differences on production cuts, while a rally in metals ran out of steam. European and developed Asian stocks slipped as investors weighed Donald Trump’s stimulus plans against threats to markets from Italy’s referendum.

Crude futures pared Monday’s gains as Iraq and Iran raised objections with OPEC officials over how to distribute output reductions, referring the issue to ministers for further consideration. Copper slumped for the first time in seven days. European shares and developed Asian stocks slid, while those in emerging markets generally performed better. The Bloomberg Dollar Spot Index steadied after a two-day loss.

“What we are seeing now is a tug of war among OPEC members to get their share of the pie,” Son Jae Hyun, a global market analyst at Mirae Asset Daewoo Co., said by phone from Seoul. “If a deal isn’t made this time, none of them will benefit.”

The impact of President-elect Trump’s surprise victory on the dollar and commodities is waning, and traders are divided on how long China will be able to stabilize its economy while cooling its property market. Investors are also focused on the Organization of Petroleum Exporting Countries’ ministers meeting due this week in Vienna, with Saudi Arabia saying oil output cuts may not be required to stabilize prices.

Commodities

  • West Texas Intermediate crude slipped 0.9 percent to $46.64 a barrel as of 8:06 a.m. in London, after rising 2.2 percent on Monday.
  • Copper futures dropped 1.6 percent on the London Metal Exchange, nickel lost 2.2 percent while zinc declined 1.5 percent.
  • Gold for immediate delivery fell 0.2 percent following last session’s 0.9 percent jump.

Currencies

  • The euro was down 0.1 percent at $1.0605, while the yen weakened 0.3 percent to 112.31 per dollar.
  • Bloomberg’s dollar gauge, which tracks the greenback against 10 major peers, was little changed after a two-day decline.
  • “Given that he hasn’t even taken office yet, the Trump rally hasn’t become completely obsolete yet as a theme,” said Ayako Sera, a Tokyo-based strategist at Sumitomo Mitsui Trust Bank Ltd. “But given the big events coming up this week, it’s probably the most sensible thing to do for investors to stay away from trading strongly.”
  • The South Korean won edged 0.1 percent higher as President Park Geun-hye said she’s willing to resign after an influence-peddling scandal.
  • The Chinese yuan gained 0.2 percent after the central bank strengthened the fixing versus the dollar for a second straight day.
  • South Africa’s rand weakened 0.8 percent. President Jacob Zuma survived the most serious challenge to his leadership yet, after a contingent of top officials failed to force him from office during a meeting of the ruling party’s National Executive Committee.

Stocks

  • The Stoxx Europe 600 Index opened down 0.5 percent. Raiffeisen Bank International AG tumbled 3.3 percent.
  • About the same number of stocks fell as rose on the MSCI Asia Pacific Index, which lost 0.1 percent. Japan’s Topix Index, Australia’s S&P/ASX 200 Index and New Zealand’s S&P/NZX 50 Index were all little changed.
  • The Jakarta Composite Index rose 0.9 percent, the biggest gain among Asian developing-nation equity benchmarks, as India’s Sensex advanced 0.8 percent.
  • The Hang Seng China Enterprises index and Shanghai’s benchmark swang between gains and losses. The central bank is clamping down further on mortgage lending in areas deemed overheated, people with knowledge of the matter said.
  • Futures on the S&P 500 rose 0.1 percent after the underlying benchmark fell from an all-time high Monday, losing at least 0.3 percent.

Bonds

  • Japan, New Zealand and Australian government bonds were all little changed.
  • Ten-year Treasuries yielded 2.31 percent, after falling five basis points last session.
  • Similar-maturity U.K. gilt yields slid four basis points, while those for bunds were little changed.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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