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Commodities: Crude consolidates after 'indifferent' reaction to latest rig-count data

By Andrew Schonberg

Date: Monday 03 Apr 2017

Commodities: Crude consolidates after 'indifferent' reaction to latest rig-count data

(ShareCast News) - Crude-oil futures are consolidating on Monday afternoon as traders look for hard evidence cartel Opec will extend its output pledge beyond June, having taken latest rig-count data somewhat indifferently.
At 15:12 GMT, Nymex-priced WTI crude was down 0.3% to $50.45 a barrel. Intercontinental Exchange-traded Brent was 0.26% lower to $53.39 a barrel. Although softer, these prices were ahead of those late afternoon Friday, the end of Q1 2017.

Oil continued to be caught in a chronic glut, with Opec pledges constantly in focus, alongside US shale production, rising US inventories and US rig counts.

The latest Baker Hughes Rig Count, issued late on Friday, said 15 rigs came online over the past week, bringing the total to 824 units, from 658 at the back end of 2016.

"An indifferent reaction to the 11th consecutive Baker Hughes Rig Count increase saw crude oil prices reach their highest level since 9 March," said Mike van Dulken and Henry Croft, both analysts at Accendo Markets, referring to the reaction at the time.

This was alongside continued speculation Opec might seek to extend its production cut beyond June alongside reports that global crude stockpiles are declining helped bullish appetite, the pair said in a statement.

"Investors will be keeping their eyes and ears peeled for any further emerging Opec-cut extension rhetoric, while the US dollar will also be of interest," said van Dulken and Croft.

Michael Hewson, chief market analyst at CMC Markets UK, said the rise in rig numbers, to a level last seen in October 2015, had again acted as a reminder that US shale producers continued to add supply at a rate quicker than Opec producers could cut it.

"While Opec secretary general (Mohammed) Barkindo can talk about the prospects of falling stock piles bringing the market back into balance, the fact remains that it is likely to happen at a much slower pace than originally envisaged," said Hewson.

That was unless Opec and non-Opec members extended the current production curbs beyond the original June deadline.

SwissQuote added that WTI was in a bearish trend since it had been unable to mount a serious challenge to resistance at $55.24, with support at $47.09.

Elsewhere among commodities, on Comex, gold was down 0.14% to 1249.40 an ounce, with silver 0.22% lower to $18.22 an ounce and copper down 0.17% to 264.8 cents a pound.

Van Dulken and Croft said gold had surrendered some of the gains made during Friday afternoon's rally as the precious metal failed to overcome 8-month falling highs resistance at $1249 again.

"While the US dollar remains a little way off Fridays two-week highs, rising lows support may see the greenback mount a second charge to regain some of its Fed-inspired losses from March, which would in turn hamper bullish prospects for the dollar-denominated safe haven asset."

SwissQuote added that overall the momentum for the precious yellow metal seemed to be bullish, despite some consolidation.

"Strong resistance is located at $1263. Hourly support can be found at $1224.10," it said.

Three-month industrial metals on London Metals Exchange were mostly lower. Zinc fell 3.45%, copper fell 1.99%, and aluminum fell 0.48%. Tin, meanwhile, rose 0.15%.

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