Register for Digital Look

Commodities: Crude rises, but may well face choppy trading ahead

By Digital Look

Date: Friday 26 May 2017

Commodities: Crude rises, but may well face choppy trading ahead

(ShareCast News) - At face value crude oil futures appeared to be doing well on Friday afternoon, but the modest rises in both WTI and Brent are off the back of yesterday's Opec-driven plunge and may well foreshadow choppy sessions ahead.
Crude prices fell on Thursday after cartel Opec extended its production curbs by nine months into 2018, disappointing some who wanted more and sparking a round of profit-taking by others.

At 15:25 BST, Nymex-priced West Texas Intermediate crude was up 0.67% to $49.23 a barrel. Intercontinental Exchange-traded Brent rose 0.54% to $51.74 a barrel.

"After yesterday's sharp falls, oil prices are stabilising a little as we head into the weekend," said Michael Hewson of CMC Markets UK.

"Opec members have insisted that the deal reached yesterday will rebalance the market, while Russia's oil minister Novak said there was scope to do more if needed."

However, Hewson and others said questions lingered over subsequent US shale production, with rig counts already over 35% up from where they were at the end of last year.

"There is a high degree of scepticism that the (Opec) cuts as announced will be particularly effective," said Hewson.

To this SwissQuote added: "Once again, the market will enter in to a wait-and-see attitude and assess the effect of the recent extension decision.

"We expect a few choppy trading sessions over the next couple of weeks but we remain highly sceptical it will fuel a rally."

FXTM research analyst Lukman Otunuga said further weakness should be expected in crude prices as the oversupply fears bite.

"From a technical standpoint, WTI crude is heavily depressed on the daily charts. A breakdown below $48 should provide encouragement for bears to challenge $46."

Meanwhile, on Comex, gold was up 0.0.87% to $1270.80 an ounce. Silver rose 1.03% to $17.37 an ounce, and copper fell 0.83% to 257.60 cents a pound.

"Gold was firm on Friday with prices breaking above $1260 as investors mulled over the tone of caution in May's Federal Reserve meeting minutes," said Otunuga.

"Although expectations are high that there will be a U.S interest rate increase in June, the longer-term hiking path remains uncertain consequently weakening the greenback.

"From a technical standpoint, the yellow metal is regaining momentum on the daily charts with bulls pressuring the $1260 resistance. A breakout and daily close above $1260 should encourage a further incline higher towards $1275."

On London Metals Exchange, three-month industrial metals were mostly rising. Aluminum firmed 0.77%, while copper added 0.74% and tin rose 0.12%. Zinc was down 0.08%.

..

Email this article to a friend

or share it with one of these popular networks:


Top of Page