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Commodities

Oil prices ease in holiday trade, market focus on next OPEC+ move

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Oil prices ease in holiday trade, market focus on next OPEC+ move
© Reuters. FILE PHOTO: The Bryan Mound Strategic Petroleum Reserve, an oil storage facility, is seen in this aerial photograph over Freeport, Texas, U.S., April 27, 2020. REUTERS/Adrees Latif/File Photo

By Yuka Obayashi

TOKYO (Reuters) -Brent crude futures snapped a three-day rally on Friday in light trade, with many investors away for the holidays, but the benchmark was still headed for a weekly gain, with the market focusing on the next step by OPEC+ and the impact of the Omicron variant.

futures slid 39 cents, or 0.5%, to $76.46 a barrel by 0544 GMT, following a 2.1% gain in the previous session. The benchmark was still on track for a weekly gain of about 4%.

U.S. markets are closed on Friday for the Christmas holiday.

Oil prices have recovered this week as fears over the impact of the highly infectious Omicron variant on the global economy receded, with early data suggesting it causes a milder level of illness.

“It’s a typical holiday market,” said Chiyoki Chen, chief analyst at Sunward Trading.

“With concerns about the fallout from Omicron fading, market focus shifted to the next move by OPEC+ at its January meeting,” he said.

The Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, will likely stick to its decision to raise oil production by 400,000 barrels per day (bpd) each month at its next meeting as long as oil prices stay above $70 a barrel, Chen added.

The group is scheduled to meet next on Jan. 4.

Still, some investors remained cautious amid surging infection cases.

Omicron advanced across the world on Thursday, with health experts warning the battle against the COVID-19 variant was far from over despite two drugmakers saying their vaccines protected against it and despite signs it carried a lower risk of hospitalisation.

Coronavirus infections have soared wherever the variant has spread, triggering new restrictions in many countries, including Italy and Greece, and record numbers of new cases.

A higher U.S. rig count also added to pressure on the oil market.

Operating U.S. oil and gas rigs rose to their highest levels since April 2020 in the most recent week, according to energy services firm Baker Hughes. Overall counts are now at 586, portending a boost in output in coming months.

“But given the soaring prices in Europe and Asia, oil will likely keep a positive tone on expectations that some industries would switch fuel from high-priced gas to oil,” said Hiroyuki Kikukawa, general manager of research at Nissan (OTC:) Securities.

Asian liquefied natural gas (LNG) prices jumped this week, despite tepid Asian demand, as upside risk in the European gas market remains a key driver directing price movement.

Global oil demand roared back in 2021 as the world began to recover from the coronavirus pandemic, and overall world consumption potentially could hit a new record in 2022 – despite efforts to bring down fossil fuel consumption to mitigate climate change.

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Commodities

Gold Down, Weighed Down by Aggressive Fed

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© Reuters.

By Gina Lee

Investing.com – Gold was down on Thursday morning in Asia, with a steady dollar and elevated Treasury yields weighing on the greenback-priced bullion, whose outlook has already been dampened by the U.S. Federal Reserve’s aggressive stance on inflation.

Gold futures edged down 0.20% to $1,812.34 by 1:31 AM ET (5:31 AM GMT). The dollar, which normally moves inversely to gold, edged down on Thursday.

Gold’s daily closing price is effectively hugging the trendline projected from its March 2020 low, and intraday volatile spikes on either side of that key trendline have lacked conviction to prompt a sustainable move, City Index senior market analyst Matt Simpson told Reuters.

The yellow metal has largely seemed to track daily moves in both the dollar and benchmark U.S. 10-year Treasury yields in recent weeks. A greenback near 20-year highs pushed gold to its lowest in well over three months on Monday.

Gold’s performance and outlook have also been impacted as the Fed adopts a more hawkish monetary policy stance on interest rate hikes.

Fed Chairman Jerome Powell on Tuesday said that the U.S. central bank would hike its interest rates as needed to curb inflation which he said threatened the foundation of the economy.

“ETF (Exchange traded fund) flows peaked on the 27th of April, and we’ve since seen a net outflow as investors have lost confidence in the yellow metal… and the rout in stock markets simply added another reason for some investors to convert their gold to cash,” said Simpson.

In Asia Pacific, Japanese trade data for April 2022 showing that exports rose 12.5% year-on-year and imports rose 28.2% year-on-year. The trade balance contracted to -¥839.2 billion (-$6.51 billion).

In other precious metals, silver inched up 0.1%, while platinum fell 0.9% and palladium was down 0.6%.

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Commodities

Oil Up as Economic Growth Worries Continue

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© Reuters.

By Gina Lee

Investing.com – Oil was up on Thursday morning in Asia, recovering from early losses as concerns over tight global supplies outweighed fears over slower economic growth.

Brent oil futures jumped 1.45% to $110.69 by 12:58 AM ET (5:58 AM GMT), after falling by more than $1 earlier in the session. WTI futures rose 1.07% to $108.18 recovering from an earlier loss of more than $2 and were up 56 cents, or 0.5%, at $107.60 a barrel for July 2022.

Both Brent and WTI benchmarks fell about 2.5% on Wednesday.

“A slump in Wall Street soured sentiment in early trade as it underlined concerns over weakening consumption and fuel demand,” Rakuten Securities commodity analyst Satoru Yoshida told Reuters.

Asian stocks on Thursday followed a steep Wall Street selloff, as rising global inflation, China’s zero-COVID policy, and the Ukraine war led to fears of an economic recession.

“Still, oil markets are keeping a bullish trend as a pending import ban by the European Union on Russian crude is expected to further tighten global supply,” said Yoshida.

The European Union earlier in the month proposed a new package of sanctions against Russia for its invasion of Ukraine on Feb. 24. The package includes a total ban on Russian oil imports in six months’ time, but the measures have not yet been adopted amid continued resistance to the plan from member countries including Hungary.

On Wednesday, the European Commission unveiled a €210 billion ($220.65 billion) plan for Europe to end its reliance on Russian fossil fuels by 2027.

Meanwhile, Wednesday’s U.S. crude oil supply data from the U.S. Energy Information Administration showed a draw of 3.394 million barrels for the week to May 13. Forecasts prepared by Investing.com predicted a build of 1.383 million barrels, while an 8.487-million-barrel build was reported during the previous week.

Crude oil supply data from the American Petroleum Institute released the day before, showed a draw of 2.445 million barrels. Capacity use on both the East Coast and Gulf Coast was above 95%, with those refineries near their highest possible running rates.

 

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Commodities

Oil prices recoup early losses on China hopes, global supply fears

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© Reuters. FILE PHOTO: Workers walk as oil pumps are seen in the background in the Uzen oil and gas field in the Mangistau Region of Kazakhstan November 13, 2021. REUTERS/Pavel Mikheyev

By Yuka Obayashi and Florence Tan

TOKYO (Reuters) -Oil prices rose on Thursday, recovering from early losses, on hopes that planned easing of restrictions in Shanghai could improve fuel demand while lingering concerns over tight global supplies outweighed fears of slower economic growth.

Brent crude futures for July were up $1.53, or 1.4%, at $110.64 a barrel at 0447 GMT, after falling by more than $1 earlier in the session.

U.S. West Texas Intermediate (WTI) crude futures for June rose 93 cents, or 0.8%, to $110.52 a barrel, recovering from an early loss of more than $2. WTI for July was up $1.57, or 1.5%, at $108.50 a barrel.

Both benchmark prices fell about 2.5% on Wednesday.

“A slump in Wall Street soured sentiment in early trade as it underlined concerns over weakening consumption and fuel demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities. [MKTS/GLOB]

Asian shares on Thursday tracked a steep Wall Street selloff as investors fretted over rising global inflation, China’s zero-COVID policy and the Ukraine war. [MKTS/GLOB]

“Still, oil markets are keeping a bullish trend as a pending import ban by the European Union on Russian crude is expected to further tighten global supply,” Yoshida said.

The European Union this month proposed a new package of sanctions against Russia for its invasion of Ukraine. This would include a total ban on oil imports in six months’ time, but the measures have not yet been adopted, with Hungary being among the most vocal critics of the plan.

The European Commission unveiled on Wednesday a 210 billion euro ($220 billion) plan for Europe to end its reliance on Russian fossil fuels by 2027, and to use the pivot away from Moscow to quicken its transition to green energy.

Also, U.S. crude inventories fell last week, an unexpected drawdown, as refiners ramped up output in response to tight product inventories and near-record exports that have forced U.S. diesel and gasoline prices to record levels. [EIA/S]

Capacity use on both the East Coast and Gulf Coast was above 95%, putting those refineries close to their highest possible running rates.

In China, investors are closely watching plans in the country’s most populous city, Shanghai, to ease restrictions from June 1, which could lead to a rebound in oil demand at the world’s top crude importer.

Stephen Innes from SPI Asset Management said news that Shanghai planned to gradually resume inter-district public transport from May 22 was positive for risk and supporting oil prices.

($1 = 0.9537 euros)

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