Oil prices rise in Asia in expectation of Aramco supply cut

 

Oil futures rose in Asian trading on Wednesday after Reuters reported Saudi Arabia would cut supplies to the region as OPEC battles against rising U.S. output that is threatening to derail its attempts to end a sustained global glut in crude.

State-owned Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June, a source told Reuters, as part of OPEC’s agreement to reduce production and as it trims exports to meet rising domestic demand for power during the summer.

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Seven million barrels is roughly two days of oil imports into Japan, the world’s fourth biggest importer. Aramco had previously been maintaining supplies to its important Asian customers.

Global benchmark Brent futures were up 25 cents, or 0.5 percent, at $48.98 a barrel at 0200 GMT. They fell 1.2 percent on Tuesday.

U.S. West Texas Intermediate crude was up 29 cents, or 0.6 percent, at $46.17 a barrel.

It also fell 1.2 percent the previous session, and the closing price for both contracts on Tuesday was the second lowest since Nov. 29, the day before the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut production during the first half of 2017.

While prices surged immediately after the agreement, in recent weeks they have come under sustained pressure as U.S. production has ramped up.

Many are now pushing back the expected timing for when the oil market will come into balance after prices began slumping nearly three years ago.

“Chief among (the) oil market’s worries is that the renewed rise in U.S. oil production is reducing the speed at which the supply surplus is being eroded,” Fawad Razaqzada, market analyst at Forex.com, said in a note.

Saudi Arabia’s oil minister Khalid al-Falih said on Monday that he expected the output deal to be extended to the end of the year or possibly longer. OPEC meets later this month.

Higher crude output from the United States should limit any upside to global oil prices through the end of 2018, the U.S. government said on Tuesday.

U.S. crude production is expected to rise by more than previously expected in 2017 to 9.31 million barrels per day from 8.87 million bpd in 2016, a 440,000 bpd increase, the U.S. Energy Information Administration said.

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Crudeoil to trade in 2769-3109

Crudeoil trading range for yesterday is 2769-3109.

Crude oil rallied following assurances by Saudi Arabia that Russia is ready to join OPEC in extending supply cuts to reduce a persistent glut.

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Saudi Arabia’s OPEC Governor Adeeb Al-Aama told OPEC and non-OPEC nations were close to agreeing a deal on supply cuts.

Traders also pointed to soaring U.S. oil output, up more than 10 percent since mid-2016 to 9.3 million bpd, levels not far off top producers Russia and Saudi Arabia.

BUY CRUDEOIL 8 MAY 2017 @ 2980 SL 2940 TGT 3020-3060.MCX.

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Bad week for commodities: Oil, gold, nickel, all take a fall

Commodities, both agri and non-agri, witnessed a slump in prices this week. In the agri commodity basket, coriander suffered the most, while in the non-agri category prices of crude oil, gold, copper and nickel slipped significantly.

Crude oil prices have been in a falling territory since past few weeks as prices have declined by around 3.2 per cent since 19th April- 1st May 2017, while MCX oil prices have declined by 4.5 percent in the same time frame. Fading geo-political tension.

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We have noticed fall in all the risk assets including oil as market sentiments remains weak across the globe. Linkage international prices and domestic prices will not change any basic fundamentals, except the adaptation of price behaviour linked to markets. Oil inventories have to fall constantly, which can only happen if the summer driving season starts with a bang and the inventory overhang is taken care off by increasing refinery operating capacity. We feel oil prices in the international ma ..

Gold prices too dipped in the physical as well as futures market. Gold fell below Rs 29,000 per 10 gm mark this week,In the local market, gold futures were trading around Rs 28,238 per 10 grams on Friday, down more than 2 percent compared to last week.The benchmark spot gold price is poised to end the week down about 3 percent, the biggest percentage fall since the week ending November 11.

Copper and nickel have turned out to be the worst performers in the base metal basket this week. Both of them have declined by more than 2 percent. Copper, being an economic barometer, is hurt by global doldrums while nickel is declining following news of rejection of appointment of Regina Lopez as environment secretary by Philippine lawmakers as it is likely to ease the supply woes for the metal used in making stainless steel.

Coriander futures prices sank to 15 months low on Wednesday after hitting lower circuit on growing concerns of rising supplies from imports and good production expectations from the new season crop in 2016-17.

The most active May coriander futures on National Commodities and Derivative Exchange (NCDEX) plunged about 24% in last one month to Rs. 6,104 per quintal. Moreover, in the current season, coriander on NCDEX witnessed heavy selling pressure during the month of April , dragging prices by 12.8% due to rise in arrivals of the new crop. The arrivals of coriander seed in the country during the first 4 month of current calendar year has increase by 30% on year to 3.31 lakh tonnes compared to 2.55 lt i ..

Market participants are worried about constant increase in imports of coriander supported by strong Indian rupee and decreasing export quantities from the country. The production of coriander in the country was adequate despite report of lower acreage during 2016/17 rabi season.

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Latest News on Gold, Silver Trade

Gold prices on the Multi Commodity Exchange (MCX) were trading lower in morning deals on Thursday on account of lack of buying interest by jewellers, retailers and investors.

The yellow metal was trading 0.59 per cent, or Rs 167, down at Rs 28,305 per 10 gram around 10.45 am (IST).

Nirmal Bang Commodities said, “We expect gold prices to trade rangebound on Thursday as expectations that the US Federal Reserve may raise interest rates as early as June boosted the dollar.”

Gold, silver trade

SPDR Gold Trust GLD, the world’s largest gold-backed exchange traded fund, said its latest holdings stood at 853.36 tonnes, remain unchanged from the previous business day.

According to the World Gold Council, demand for gold in India could be soft in the second half of 2017, as the rollout of a new national sales tax from July is expected to dent appetite in the world’s second-biggest consumer.

But sales are likely to be robust during the first six months of the year, the WGC said.

The WGC kept its forecast for India’s full-year demand at 650 tonnes to 750 tonnes, lower than a 10-year average of 845 tonnes, but just above last year’s level.

On the other hand, silver was trading 0.39 per cent, or Rs 151, down at 38141 per 1 kg in the morning trade on Thursday.

Holdings of the largest silver-backed exchange-traded-fund (ETF), New York’s iShares Silver Trust SLV, stood at 10,412.74 tonnes, down 4.49 tonnes, from the previous business day.

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