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Commodities: Crude rises on reports of Russia compliance with Opec output limits

By Andrew Schonberg

Date: Friday 28 Apr 2017

Commodities: Crude rises on reports of Russia compliance with Opec output limits

(ShareCast News) - Crude-oil futures are higher on Friday as traders liked reports Russia has complied with Opec output limits, and also on hopes the cartel will extend its production cut pledge.
At 15:33 BST, Nymex-priced West Texas Intermediate crude was up 1.25% to $49.58 a barrel. Intercontinental Exchange-traded Brent was ahead 0.62% to $51.76 a barrel.

"With oil prices languishing near one month lows it was perhaps inevitable that we'd see a rebound, with reports that Russia had fully complied with OPEC output limits helping support prices," said Michael Hewson, chief market analyst at CMC Markets UK.

He added that speculation continued on whether Opec members would be able to coalesce around an agreement next month to extend the cuts for another 3-6 months.

"Prices still look as if we'll see a second successive monthly decline, with the latest US rig count set to see another increase when figures are released later today," said Hewson.

Lukman Otunuga, research analyst at FXTM, said oil markets remained entangled in a fierce tug of war, with oversupply concerns and optimism over OPEC stabilising the saturated markets.

"Although WTI crude staged an impressive rebound during early trading on Friday amid a potential OPEC cut extension, the recent reports of Libya's biggest oil field reopening may compound oversupply fears, consequently capping upside gains," he said.

The threat of US shale's incessant pumping undermining the Opec output cut extension may expose oil prices to steeper losses.

"From a technical standpoint, WTI Crude remains bearish on the daily charts with bears potentially exploiting the technical bounce to drag prices lower," said Otunuga.

"Previous support at $50 could transform into a solid resistance that opens a path towards $47.50. In an alternative scenario, a breakdown below $49.00 may open a similar route to $47.50."

Meanwhile, on Comex, gold was up 0.13% to $1267.6 an ounce. Silver fell 0.6% to $17.23 an ounce, and copper gained 0.6% to 260.85 cents a pound.

"Gold prices have seen a positive month despite the declines seen this week in the wake of the Macron bounce (after the first round of France's presidential election)," said Hewson, also noting rising expectations of a US rate rise in June.

He added that investors were hedging into the yellow metal at a time when geopolitical concerns in Asia over North Korea continued to rise.

On London Metals Exchange, three-month industrial metals were lower. Aluminum was down 2.06%, zinc fell 1.1%, tin shed 0.43% and copper dropped 0.4%.

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