Register to get unlimited Level 2

Commodities: Crude bounces back, but overall mood remains bearish

By Andrew Schonberg

Date: Tuesday 28 Mar 2017

Commodities: Crude bounces back, but overall mood remains bearish

(ShareCast News) - Crude-oil futures are bouncing back on Tuesday afternoon after emerging from their lows of last week, but the overall mood towards the black liquid is considered to remain bearish.
Oil has been caught in a now chronic supply, with Opec pledges on output more or less constantly in focus, alongside US shale production, rising US inventories and rig counts.

At 15:20 GMT, Nymex-priced WTI crude was up 0.96% to $48.19 a barrel. In parallel, Intercontinental Exchange-traded Brent was ahead 1.02% to $51.27 a barrel.

This followed the two grades of crude being down more than 1% at the same time on Monday.

"Oil prices have picked up after failing to move through the lows of last week, and on news that a pipeline in Libya had been closed," said Michael Hewson of CMC Markets UK.

He noted continued speculation about an extension to the Opec output freeze was helping limit the downside.

Dean Popplewell, vice president of currency analysis at Oanda, said oil's gains on Tuesday were down to the weaker US dollar.

"These prices gain are somewhat capped by surging US production and market uncertainty over whether an Opec-led supply cut is big enough to re-balance the global market," he said.

SwissQuote added crude oil's bearish pressures continued despite the bounce due to a short-squeeze.

"The commodity (WTI) had been unable to mount a serious challenge to resistance at $49.61 hourly support given at $47.09. Expected to see deeper selling pressures," said SwissQuote.

Meanwhile, on Comex, gold was up 0.02% to $1259.1 an ounce, with silver up 0.45% to $18.19 an ounce and copper down 0.15% to 262.8 cents a pound.

Hewson said gold, despite its failing to overcome the 200-day moving average yesterday, had not dipped that much.

"Investors remain cautious about the prospects of success on tax reform and additional infrastructure spend," Hewson suggested.

On Monday, gold was a beneficiary of safe-haven appeal and the lower dollar, with traders then rattled by US President Donald Trump's failure to get his Healthcare Bill passed in Congress.

SwissQuote said gold's momentum seemed to back to bullish.

"Strong resistance is located at $1263. Hourly support can be found at $1224.10. Expected to show further strengthening."

Three-month industrial metals on London Metals Exchange were all firmly lower. Zinc plunged 2.51%, while tin dropped 1.76%. Copper lost 0.76% and aluminum shed 0.46%.


Email this article to a friend

or share it with one of these popular networks:

Top of Page