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Commodities: Crude ahead on hopes of US EIA data confirming oil draw

By Andrew Schonberg

Date: Wednesday 03 May 2017

Commodities: Crude ahead on hopes of US EIA data confirming oil draw

(ShareCast News) - Crude-oil futures are ahead on Wednesday as traders look ahead to US official data this afternoon they hope will confirm a fall in that country's inventories of the precious black liquid last week.
Last night, the American Petroleum Institute (API) reported a 4.2m barrel drop in US oil stores last week, against market forecasts for a draw of 2.2m barrels.

The Energy Information Administration (EIA) data due out this afternoon was hoped to confirm this retraction in stores. However, API and EIA data were not always congruent, which could cause whipsawing in pricing.

At 13:02 BST, Nymex-priced West Texas Intermediate crude was up 0.59% to $47.94 a barrel. Intercontinental Exchange-traded Brent was up 0.67% to $50.80 a barrel.

"WTI crude was exposed to heavy losses this week as anxiety over the rising output in Libya and Canada, coupled with concerns of a dip in compliance with OPEC's production cuts enticed sellers to attack," said Lukman Otunuga, research analyst at FXTM.

He said it was increasingly obvious that oil prices remained gripped by the oversupply fears, with confidence rapidly diminishing over cartel Opec's ability to stabilise the markets.

While some in the market were optimistic that Opec would extend its production pledges of late 2016, others were sceptical, questioning whether prices would ever balance out.

"From a technical standpoint, WTI Crude is heavily bearish on the daily charts and a breakdown below $47.50 could open a path towards $44.00," said Otunuga.

SwissQuote said WTI crude's support was now at $48.87, with resistance at $50.71.

"In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely," it said.

Meanwhile, on Comex, gold was down 0.17% to $1254.9 an ounce. Silver fell 0.04% to $16.83 an ounce, and copper dived 2.26% to 257.60 cents a pound.

Mike van Dulken and Henry Croft, both analysts at Accendo Markets, observed that gold was virtually unchanged overnight as investors.

This was, the pair said, as markets looked ahead to tonight's US Federal Reserve interest rate decision, although few expect its policymakers to hike rates just yet.

"The course of further hikes in 2017 will be the key focus for investors," said van Dulken and Croft in a note.

"A marginally stronger US dollar has seen the precious metal fall from overnight highs of $1257, however it remains in a tight $1252-$1258 channel.

SwissQuote said the safe-haven yellow metal had broken through support at $1260.

"The road is wide-open for further decline," it said. Other factors affecting gold's pricing were the upcoming final round in France's presidential vote, Brexit and wider geopolitical uncertainty.

"In the long-term, the technical structure suggests that there is a growing upside momentum," opined SwissQuote.

On London Metals Exchange, three-month industrial metals were mostly ahead. Zinc rose 1.22%, copper gained 1.16%, aluminum added 0.94% and tin firmed 0.3%.

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