Oil prices dip on fears Middle East spat could harm OPEC cuts-SapForex24

Oil prices reversed gains to trade down on Monday on concerns that the cutting of ties with Qatar by top crude exporter Saudi Arabia and other Arab states could hamper a global deal to reduce oil production.

Saudi Arabia, the United Arab Emirates, Egypt and Bahrain closed transport links with top liquefied natural gas (LNG) and condensate shipper Qatar, accusing it of supporting extremism and undermining regional stability.

The move pushed Brent crude prices up as much as 1 percent, before paring gains to trade down 30 cents at $49.65 a barrel at 1046 GMT (6:46 a.m. ET).

U.S. West Texas Intermediate futures were at $47.40 a barrel, down 26 cents.
With a production capacity of about 600,000 barrels per day (bpd), Qatar’s crude output is one of OPEC’s smallest but tension within the Organization of the Petroleum Exporting Countries could weaken the supply deal, aimed at supporting prices.

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“I think it’s still going to be a bit of a debate on the true impact it can have on the oil market,” said Olivier Jakob, strategist at Petromatrix.

“In terms of oil flows it doesn’t change very much but there is a wider geopolitical impact one needs to consider,” Jakob added, explaining that a breakdown in relations between Qatar and Saudi Arabia could make the OPEC-led agreement on production cuts less effective.

There are already doubts the effort to curb production by almost 1.8 million bpd is seriously denting exports.

While there was a dip in OPEC supplies between February and April, a report on Monday by Thomson Reuters Oil Research said OPEC shipments likely jumped to 25.18 million bpd in May, up over 1 million bpd from April.

Brent futures are still down about 7 percent from their open on May 25, when OPEC opted to extend production cuts into 2018.

Crude output in the United States, which is not participating in the cuts, has jumped more than 10 percent since mid-2016 to 9.34 million bpd, close to levels of top producers Saudi Arabia and Russia.

The rise in U.S. production has been driven by a record 20th straight weekly climb in oil drilling, with the rig count climbing by 11 in the week to June 2, to 733, the most since April 2015.

“Investors continue to doubt the ability of OPEC to rebalance the oil market, with crude oil prices remaining under pressure amid further signs of rising U.S. oil production,” ANZ bank said.

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Oil prices drop amid glut concerns, U.S. withdrawal from climate deal-SapForex24

Oil prices tumbled below $50 on Friday amid worries that U.S. President Donald Trump’s decision to abandon a global climate pact could spark more crude drilling in the United States, stoking a persistent glut in global supply.

Global benchmark Brent crude futures (LCOc1) was down 1.7 percent, or 80 cents, at $49.75 a barrel, as of 0725 GMT.

U.S. West Texas Intermediate crude (CLc1) futures dropped 87 cents, or 1.81 percent, to $47.46 per barrel.

Commodity markets were absorbing news the United States would withdraw from the landmark 2015 global agreement to fight climate change, a move that fulfilled a major campaign pledge but drew condemnation from U.S. allies.

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“This could lead to a drilling free-for-all in the U.S. and also see other signatories waver in their commitments,” said Jeffrey Halley, senior market analyst, OANDA.

“This outcome could increase the supply-side equation from the United States and complicate OPEC’s forward projections. A scenario that would not be favorable to oil prices.”

Surging U.S. production has put a strain on OPEC members’ efforts to curb production to drain a global crude supply overhang.

A week ago, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC members met in Vienna to roll over an output cut deal to reduce 1.8 million barrels per day (bpd) until the end of next March.

Russian Deputy Prime Minister Arkady Dvorkovich said on Friday he did not think that the global output cut agreement would be altered should prices go lower.
Russia’s Rosneft CEO Igor Sechin also said the market cannot stabilize unless all producers cut output.

Oil prices are down some 7.5 percent since OPEC’s May 25 decision to extend the cuts.

Faced with lingering glut woes, the oil cartel also discussed last week reducing output by a further 1 to 1.5 percent, and could revisit the proposal should inventories remain high, according to sources.

But oil markets were offered some support by official data that showed crude inventories in the United States, the world’s top oil consumer, fell sharply last week as refining and exports surged to record highs.

Crude stockpiles were down by 6.4 million barrels in the week to May 26, beating analyst expectations for a decrease of 2.5 million barrels.

However, U.S. crude production rose to 9.34 million bpd last week, up nearly 500,000 bpd from a year ago.

“We may or may not see more huge draws. But crude production is slowly but surely going to neutralize the (OPEC-led)production cut,” said Sukrit Vijayakar, director of energy consultancy Trifecta.

Rising output from Nigeria and Libya, which are exempted from the deal, is also undercutting oil producers’ attempt to limit production.

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Oil up on expectations of extended, possibly deeper, output cut-Sapforex24

Oil prices rose on Monday, bolstered by confidence that top exporters will this week agree to extend supply curbs, with suggestions the cuts could even be deepened.
Brent crude gained 48 cents o $54.09 a barrel by 1043 GMT (6:43 a.m. ET), with U.S. light crude up 47 cents at $50.80.

Both benchmarks have climbed more than 10 percent from lows earlier this month.
Prices have risen on expectations that the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, will extend for another six or nine months a deal to cut supplies by 1.8 million barrels per day (bpd).

“The decision (to extend cuts) seems to be almost a done deal,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets. “There seems to be a very high harmony in the group.”

The possibility of deepening the cuts was also being discussed ahead of a meeting of OPEC and other producers in Vienna on May 25, sources said.

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But such talk could lead to disappointment if not approved, Commerzbank (DE:CBKG) analysts said.

“If the cuts are merely to be extended, this is likely to be met at best with a neutral reception, if not even with disappointment,” Commerzbank said in a note.
Some analysts argue that deeper cuts are required to balance the market, pointing to a slight rise in OPEC exports this year.

The U.S. Energy Information Administration (EIA) expects OPEC net oil export revenues to rise in 2017, partly because of “slightly higher” OPEC output.
Deeper cuts might, however, serve to stimulate U.S. shale production, said Schieldrop at SEB Markets.

“If you cut production, it’s no free lunch. You get something in the short term, but you get a backflip in the medium term, which is more production in 2018 and 2019,” he said.

Goldman Sachs (NYSE:GS) says that the U.S. rig count for new oil production has jumped by 404 since May last year, representing a rise of 128 percent.

U.S. oil production has already climbed by 10 percent, or almost 900,000 bpd, since mid-2016 to 9.3 million bpd.

Iraqi oil minister Jabar al-Luaibi said in a speech on Monday that OPEC’s No.2 producer had met its share of production cuts, but added that the country remains ready to meet any global demand growth that may arise.

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Gold moves higher on weaker dollar and geopolitical tension-SapForex24

GOLD PRICES rose in European trade on Monday as a weaker dollar and tensions on the Korean peninsula supported demand.

On the Comex division of the New York Mercantile Exchange, gold for June delivery gained 0.16% to $1.290.50 a troy ounce.

Gold also benefitted Monday from a weaker dollar as the greenback felt pressure from Friday’s release of weak U.S. retail sales and inflation data.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.30% at 100.19 by 4:02AM ET (8:02GMT).

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A weak dollar usually supports GOLD PRICES, as it bolsters the metal’s appeal as an alternative asset and makes dollar-priced commodities more attractive to holders of other currencies.

Geopolitical tension surrounding North Korea also remained on markets’ radar, supporting demand for safe haven assets, a day after the country’s attempted launch on Sunday of a ballistic missile failed.

The U.S. is working with allies and China on responses to the failed test, U.S. President Donald Trump’s national security adviser said on Sunday.

Elsewhere in metals trading, silver was up 0.43% at $18.590 a troy ounce.
Platinum slipped 0.03% at $977.10 a troy ounce, while palladium lost% to $794.40 a troy ounce. Copper gained 0.60% to $2.586 a pound.

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Oil prices rise on potential extension of output cuts -SapForex24

Oil prices rose on Wednesday, putting crude futures on track for their longest streak of gains since August 2016, as Saudi Arabia was reported to be lobbying OPEC and other producers to extend a production cut beyond the first half of 2017.

Brent Crude futures were up 20 cents, or 0.36 percent, at their highest since early March at $56.43 per barrel at 0656 GMT (02:56 a.m. EDT).

If Wednesday’s rise holds, it would mark the seventh straight daily increase. That would beat a six-day bull-run from August 2016, although the price jump then was 17.5 percent versus a 6-percent rise in the current rally.

U.S. West Texas Intermediate (WTI) crude futures were up 18 cents, or 0.34 percent, at $53.58 a barrel, also their highest since early March.

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Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), has told other producers that it wants to extend a coordinated production cut beyond the first half of the year, the Wall Street Journal reported.

OPEC and other producers, including Russia, have pledged to cut output by around 1.8 million barrels per day (bpd) during the first half of 2017 in an effort to rein in oversupply and prop up prices.

While compliance from some participants has been patchy, Saudi Arabia has made significant cuts, with production down 4.5 percent since late 2016, despite a slight increase in March to 9.98 million bpd.

“(The) Saudi Arabian production reduction appears to be ahead of forecast and gave oil a boost,” said Jeffrey Halley of futures brokerage OANDA in Singapore.
Despite this, there are still concerns that oil markets remain bloated and oversupplied.

Fearing a loss of market share, Saudi Arabia is shielding its most important customers in Asia from the cuts, continuing to supply them with all contractual volumes.

And in the United States, both production and inventories are surging.
The Energy Information Administration (EIA) said on Wednesday that U.S. 2018 crude oil output would rise to 9.9 million barrels per day in 2018, from 9.22 million bpd this year.

With demand expected to rise by 340,000 bpd in 2018, that will leave increasing amounts of U.S. oil for exports or to be put into storage.

U.S. commercial crude inventories hit a record 535.5 million barrels this month, although a report on Tuesday by the American Petroleum Institute suggested a dip.

Official U.S. production and inventory data will be published later on Wednesday by the EIA.

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Gold moves higher on geopolitical tension, takes Yellen in stride – SapForex24

Gold prices rose in European trade on Tuesday as rising political tension over North Korea and Syria supported demand for the safe-haven metal.

On the Comex division of the New York Mercantile Exchange, gold for June delivery gained 0.39% to $1.258.85 a troy ounce.

U.S. Secretary of State Rex Tillerson is currently at the G7 Foreign Affair Ministers meeting in Italy where political leaders are working to produce a cohesive message on Syria.

The U.S. had been working to rally international support for its revised stance on Syria ahead of the American Secretary of State’s first diplomatic trip to Moscow.
However, the Kremlin announced Monday that Tillerson and Russian President Vladimir Putin will not meet in what could be a sign of increased tensions.

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Markets also focused eyes on Asia as North Korea warned Tuesday of “catastrophic consequences” in response to any further provocations by the U.S., days after a U.S. Navy battle group was sent to waters off the Korean peninsula.

Stateside, remarks Monday from Federal Reserve (Fed) chair Janet Yellen provided little effect on the precious metal as she repeated her outlook that the central bank would raise U.S. interest rates gradually with an aim to sustaining full employment and near-2% inflation without letting the economy overheat.

“Whereas before we had our foot pressed down on the gas pedal trying to give the economy all the oomph we possibly could, now allowing the economy to kind of coast and remain on an even keel — to give it some gas but not so much that we are pressing down hard on the accelerator — that’s a better stance of monetary policy,” she said.

“We want to be ahead of the curve and not behind it,” Yellen explained.
Elsewhere in metals trading, silver was up 0.13% at $17.938 a troy ounce.

Platinum rose 0.70% at $946.60 a troy ounce, while palladium gained 0.30% to $792.35 a troy ounce. Copper inched up 0.08% to $2.606 a pound.

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