Thursday, 17 January, 2019

Oil down but set for weekly gain amid caution over global economy

Oil Price Fundamental Daily Forecast – End of Trade Talk Optimism May Encourage Profit-Taking Oil prices up with OPEC cuts, US-China trade talks
Nellie Chapman | 14 January, 2019, 05:22

Markets are optimistic that the trade-war between Washington and Beijing will be averted.

Wagers on increasing prices climbed the most in a month, reversing course from last week.

A partial US government shutdown and tepid economic data in some countries also dragged on broad financial markets. Nonetheless, it's still down by nearly a third since October and faces continuing pressure from the boom in US shale drilling and an uncertain economy.

Heightened risk appetite boosted US Treasury yields to the highest this year, while the US dollar extended losses after minutes from a December 18-19 Federal Reserve policy meeting showed many Fed policymakers said the central bank could be patient on future rate hikes.

Another driver of bearish sentiment - rising global output and inventories - took a back seat on Friday due to conflicting messages from different sources, ie: while JBC Energy said it was likely that US production was "significantly above 12 million barrels per day [bpd]" by this month, Baker Hughes data showed that USA energy firms this week cut four oil rigs for a second week of declines - an indication that drilling plans are being downsized because of uncertainty over a recovery in crude prices. WTI surged 2.58 dollars to settle at 52.36 dollars a barrel, while Brent crude rose 2.72 dollars to close at 61.44 dollars a barrel. The markets have had their day, they have pushed the Federal Reserve to work towards a sort of concerted patience stance. "Now we've got back to an equilibrium point".

E-Mini futures for the S&P 500 were last down almost 0.35 percent.

ENERGY: Oil prices eased after rallying for the ninth consecutive day.

Worldwide benchmark Brent crude traded at $59.36 per barrel at 0645 GMT with a 1.3 percent gain after it closed Tuesday at $58.61 a barrel.

USA crude was last trading 0.55 percent lower at $52.03 a barrel.

The OPEC deal had hung in the balance on concerns that Iran, whose crude exports have been depleted by US sanctions, would receive no exemption and block the agreement. In Riyadh on Wednesday, Al-Falih said that still looks "more than sufficient" to stabilize prices, although he didn't rule out further action if necessary. "That's really good for the cost of money and taking some further headwinds out of the US dollar", he said.

Gold prices rose on Wednesday, with spot gold XAU= rising 0.49 percent to $1,291.2 per ounce.

The dollar remained on the defensive after hitting its lowest level since mid-October amid signs Fed policymakers are becoming more cautious about future rate hikes and as investors unwound safe-haven bets due to optimism over the trade talks. WTI was recorded as $51.75 a barrel at the same time marking a 0.8 percent loss, after closing the previous session at $52.17 per barrel.

In commodity markets, spot gold edged down to $1,292.70, but still not far off a near seven-month peak of $1.298,60 scaled on Friday.