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Commodities: Crude around even ahead of this week's stores data, Opec

By Digital Look

Date: Tuesday 23 May 2017

Commodities: Crude around even ahead of this week's stores data, Opec

(ShareCast News) - Crude-oil futures are trading around even Tuesday afternoon, having recovered from nadirs earlier in the session and ahead of Opec's key meeting on Thursday.
The cartel is expected to extend its output curbs by nine months and into 2018 when it meets in Vienna on 25 May.

Ahead of this, traders would be looking to US inventories data out over the next two days -- the industry's American Petroleum Institute tonight and the US government's Energy Information Administration tomorrow afternoon.

At 15:11 BST, Nymex-priced West Texas Intermediate crude was up 0.0% to $51.13 a barrel. Intercontinental Exchange-traded Brent fell 0.02% to $53.86 a barrel.

IG chief market analyst Chris Beauchamp observed that Kuwait had let everyone know that a big extension in cuts could be difficult to achieve.

"This sounds like expectation management -- given the surge in crude prices in recent weeks," he said.

"The cartel needs to play down hopes of a deal, so that when one arrives the market will roll over obediently and continue bidding up the oil price."

Naeem Aslam, chief market analyst at ThinkMarkets, said the markets had pretty much priced the extension in but whether all members are willing to play along for another nine months is anything but certain and that is what investors will be focusing on.

"The proof of the pudding is in compliance," he said, adding that "no rabbits" were expected out of Opec's hat on Thursday.

"Even if the much-anticipated extension does get inked, it is the ability of individual members to deliver that will ultimately define the supply and most importantly the oil price," said Aslam.

"So far, Opec has complied by an impressive 90 percent, with Saudi Arabia and Iraq being the main contributors."

Meanwhile, on Comex, gold was up 0.1% to $1262.6 an ounce. Silver rose 0.49% to $17.28 an ounce, and copper fell 0.25% to 258.90 cents a pound.

"Gold holds its trend of rising support at $1260 thanks to a weak USD, but (has been) unable to breach last week's $1265 highs," said Mike van Dulken, head of research at Accendo Markets.

On London Metals Exchange, three-month industrial metals were mostly rising. Zinc firmed 0.67%, while tin added 0.39% and copper rose 0.37%. Aluminum, however, fell 0.28%.

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