Commodities
Major oil over-producers, Nigeria & Iraq, compelled to cut their production
Brent crude was slightly up by 0.04% to trade at $43.23 at 5:42 am local time on Thursday.
The U.S. Energy Information Administration (EIA) recently released its data showing a 5.654-million-barrel figure, which is higher than the 3.114-million-barrel draw predicted. Such increase came as a shocker to many oil stake holders, prompting OPEC+ to put more pressure on over-producers such as Nigeria and Iraq, to meet the level of compliance set by limiting their oil production.
Recall that barely two months ago, Nigeria and Iraq were reported not to have honoured their pledges, and had promised to limit global crude oil production by 9.7 million barrels of crude oil per day.
Iraq was able to achieve about 38% compliance rate of its agreed output cut for the month of May, while Nigeria, achieved much lower compliance of the agreed output cut, recording 19% compliance of what was agreed.
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Brent crude was slightly up by 0.04% to trade at $43.23 at 5:42 am local time on Thursday, while the West Texas Intermediate was slightly down 0.7% to trade at $40.87.
“The market is struggling to get strong conviction to the upside at the current point in time,” said Lachlan Shaw, head of commodity research at National Australia Bank in a note to Reuters. “There’s mixed evidence on demand.”
The implied volatility for Brent crude price has plunged it to the lowest levels triggered by prices collapsing at the end of Q1 2020 as many oil traders shifted their attention to tightening oil output due to the agreement with the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
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Meanwhile, Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke about the macros that oil traders are taking seriously. He said:
“The industry seems more focused on medium and long-term drivers for oil. Still, traders are keeping an eye out for signs of a reaction to US production data and news on new Covid-19 infection numbers. US crude production was flat for the second consecutive week at 11mbd, down 1.3mbd y/y and down 2.1mbd from March. The EIA’s short-term energy outlook cut US production estimates for May and June but increased them for the second half of this year and 2021.”
Commodities
Brent Crude price trades at $45 per barrel, as fuel demand picks up
Brent crude held most of it gains from the previous trading session.
Brent Crude oil prices dropped slightly at Asia’s trading session.
Brent crude prices held most of it gains from the previous trading session after U.S. government data showed a fall in U.S Crude Stockpiles supporting the view that fuel demand is picking up despite the COVID-19 pandemic.
Brent crude was slightly down by 0.07% to trade at $45.40 a barrel by 04.32 GMT, after a gain of around 2% in the previous session.
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Quick fact: Brent crude is the leading global benchmark for Atlantic basin crude oil. The international benchmark is used to set the price of crude oil of about two-thirds of the world’s traded crude oil including Nigeria’s crude.
However, Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics, revealed vital macros, that could keep crude oil relatively stable in the coming days. He said;
“But even worries around stalled US fiscal talks are partly offset by the US administration’s conciliatory tone on China’s compliance with the ‘Phase One’ trade deal.
“The upcoming six-month assessment seems unlikely to prompt any significant fireworks. Also, investor’s optimism remains high on a vaccine cure that is no longer being viewed as a pie in the sky.
“Finally, the US dollar’s weakness helps Oil prices in general, but even more so in this environment, as the weaker US dollar reflects a global “risk-on” environment, not a flagging US economy. “
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Global COVID-19 cases now exceed 20 million, so in the absence of meaningful progress on a COVID-19 vaccine, traders are still looking over their shoulders to where new lockdowns might be necessary.
Commodities
Gold prices drop below $1,900 after U.S dollar strengthens
The plunge came as appetite for risk assets recovered thanks to a stronger greenback and real rates.
Gold prices dropped sharply on Wednesday at London’s trading session. Gold futures were down 2.69% to trade at about $1,893.20 as at the time this report was drafted.
The plunge came as appetite for risk assets recovered, thanks to a stronger greenback and real rates. The U.S dollar is up on Wednesday, continuing to rise from its two-year lows.
The present huge sell-offs recorded in the precious metal market astonished many gold traders after the per-ounce price of the yellow metal plunged below $1,900.
READ MORE: Silver surpasses three-week high, joins Bullish momentum
Here’s an Insight: Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained the macros, giving Gold bears such strength, as the precious metal continues its sudden downward trend. He said;
“The real pain trade gold as swollen positions got hit with the truncheon, and gold plunged the most in seven years as the bottom fell out of the markets with US Treasuries and bunds bear-steepening and real yields higher.
“Gold markets sold off picking speed exponentially as freshly minted gold longs ran for the exit.
“And in typical low liquidity August fashion, market makers were merciless pounding gold to within a hair’s breadth of $1900 as the steam roller got heading downhill when the afternoon Shanghai session saw waves of Asia banks selling en masse.”
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Whether or not gold can regain its previous highs will depend on whether there is more room for downside in real yields or more dovish policies by the US Federal Reserve. Still, the possibility of squeezy price action remains in play after the US Bond market sent out the most explicit warning last week.
Commodities
Gold price loses $80 following Russia’s COVID-19 vaccine approval
This marks gold’s steepest daily decline in nearly five months.
Gold futures have lost about 5% or $80 in less than four hours, at the London trading session this afternoon.
Gold futures fell as low as $1,950 per ounce, $80 differential from its opening price of $2,030
This marks gold’s steepest daily decline in nearly five months, even as global stocks went bullish following news that Russia’s COVID-19 vaccine has obtained regulatory approval.
READ MORE: Cocoa prices melt lower as COVID-19 weakens demand
The COVID-19 vaccine approval by Russia was met with some skepticism by experts.
Russian President Vladimir Putin announced on Tuesday that a locally developed vaccine for COVID-19, Sputnik-V, has been given regulatory approval and is ready for use.
Russian Health Minister Mikhail Murashko said that the vaccine had “proven to be highly effective and safe”, with mass vaccination planned to start in October.
But health regulators elsewhere have cast doubts on the vaccine, as it has not yet gone through safety trials and Russia did not offer any scientific evidence of the vaccine’s effectiveness and safety.
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