Monday, 21 January, 2019

Oil prices fall while demand for US Treasuries stays strong

Oil prices stable after two-day decline but rising U.S. output drags U.S. crude production pushed up largely by shale oil drilling is expected to rise above 11 million bpd by late 2018. Image source Reuters
Nellie Chapman | 13 March, 2018, 20:18

Crude oil futures are trading lower early Tuesday, extending its losses from the previous session. U.S. West Texas Intermediate (WTI) crude futures CLc1 fell 68 cents, or 1.1 percent, to settle at $61.36 per barrel.

Aside from cryptocurrencies being the main subject of the markets recently, commodities are reaching new heights with crude oil on the rise with solid growth.

The split is driven by differing views over whether $70 a barrel would send USA shale companies into a production frenzy that could cause prices to crash.

Oil prices were down on Monday as investors grappled with ongoing concerns over rising USA output and tight OPEC supply, while the benchmark US yield hovered near multi-year highs ahead of an auction later in the day.

Brent crude, the benchmark for more than half the world's oil, traded at $65.07 a barrel at 10:11 London on Monday, compared with about $45 in June.

Crude prices rose on Friday after the US economy added the biggest number of jobs in more than 1-1/2 years in February. The Organization of Petroleum Exporting Countries and its allies pledge to curb output may be undermined as the US ships more oil to Asia, according to ING Groep NV.

Oil markets continued to flip back and forth over the past weeks due to excless supply, increasing US production and soaring global demand.

Friday's strong USA payroll data, which showed a hefty 313,000 rise in jobs but tempered growth in hourly earnings, supported Treasuries in early trade. That is not far off the 2.957 percent yield on February 21, the highest since the instrument yielded more than 3 percent in January 2014.

On Monday, benchmark 10-year notes last rose 8/32 in price to yield 2.8663 percent, hovering near multi-year highs.

OPEC should beware as US shale producers are set to steal a bigger slice of the market in Asia, which consumes more oil than any other region, according to industry consultant Wood Mackenzie Ltd.

Increased supply did not quell demand for the U.

The Nasdaq Composite was up 33.19 points, or 0.44 percent, at 7,594.00.

Investors are focused on today on U.S. consumer price index data.

Last week's jobs data, as well as an easing of fears of a global trade war, also boosted stocks across many parts of the world. DXY fell 0.21 percent, with the euro up 0.27 percent to $1.2338.