Friday, 24 November, 2017

Crude Oil Mixed In Asia After Disappointing API Estimates, Middle East Eyed

OMC stocks Bharat Petroleum Corp. Ltd Hindustan Petroleum Corp. Ltd and Indian Oil Corp. Ltd were down 1-2 OMC stocks Bharat Petroleum Corp. Ltd Hindustan Petroleum Corp. Ltd and Indian Oil Corp. Ltd were down 1-2
Theresa Hayes | 10 November, 2017, 02:51

Brazil has rejected an informal effort by Saudi Arabia to coax Latin America's top oil producer into joining OPEC-led production cuts aimed at boosting prices that have been hit by oversupply, a Brazilian official said.

With crude prices soaring recently, the nation's three major oil ETFs registered an average return of 6.2 percent in the month to Tuesday, according to KG Zeroin.

United States light crude CLc1 was up 46 cents or 0.8% at US$57.27, just shy of this week's more than two-year high of US$57.69 a barrel. If that happens, some said prices could rally more.

"Prices may have reached a short-term peak", said Fawad Razaqzada, analyst at futures brokerage Forex.com.

"There is an exuberance in the market about there being a done deal to extend through the end of 2018 and I think there's likely to be disappointment in that come November 30", Ed Morse of Citigroup told Bloomberg.

Despite this, some analysts say the price rally of the past months may have run its course, at least for now.

US output expanded for a third week to 9.62 million barrels a day, the highest in weekly Energy Information Administration data going back to 1983.

"As we get into 2018 and 2019, more oil is coming onto the market, a lot of it from USA tight oil", said Simon Flowers, chief analyst at Wood Mackenzie energy consultancy.

Oil prices have been on the rise ever since the Oil of the Petroleum Exporting Countries (OPEC) announced it has plans to extend its 1.8 million barrels per day (BPD) cap to the end of 2018, a deal which could be finalised between de facto leader Saudi Arabia and Russian Federation in Vienna on 30 November.

Output looks set to rise further. Last month, it expected a 680,000 bpd year-over-year increase to 9.92 million bpd.

Crude oil prices drift lower early Wednesday after Saudi Arabia's monetary authority seeks to allay investor concerns.

"It doesn't matter how bullish the fundamentals are ... when an asset goes vertical there is always room for a pullback and consolidation of recent price moves", said Greg McKenna, chief market strategist at brokerage AxiTrader.