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Commodities

Crude oil prices rally up amid high energy demand

Recent data retrieved from the American Petroleum Institute (API) reveals a decline of 4.785 million barrels for the week ending December 25.

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Oil, DPR, FG announces commencement of bids for marginal oilfields despite court injunction

Oil prices rallied higher at Wednesday’s trading session in London. The gains in crude oil prices are largely attributed to a larger-than-expected decline in U.S. Stockpiles and hopes for a U.S. COVID-19 fiscal aid package boosted fuel demand recovery outlook.

  • At the time of writing this report, Brent oil futures traded at $51.44 printing gains of about 0.40% and West Texas Intermediate futures surged by 0.56% to $48.27 a barrel.

READ: At 60, can Nigeria keep depending on Crude Oil?

What this means

Recent data retrieved from the American Petroleum Institute (API) revealed a drop of 4.785 million barrels for the week ended December 25, much larger than the 2.1-million-barrel drop energy experts anticipated earlier.

READ: Oil prices drop amid curb on air travels

What they are saying

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the prevailing macro helping oil prices to stay above key support levels;

Specta
  • “Oil prices have remained supported by a weaker US dollar overnight and have finally found a friend in the API inventory report. This morning the American Petroleum Institute (API) reported a much larger draw versus consensus in crude oil inventories for the week ended December 25. Any hard-fought gains will be capped by OPEC’s plans to gradually increase oil production after the start of the year despite the new Covid-19 variant increasing government and self-imposed travel restrictions worldwide. We do not have the latest variant in Thailand. Still, the local Covid-19 flare-up has canceled many holiday revelers’ plans and blotted out any New Year’s celebrations, for example.”

READ: Fuel prices: Information Minister defends President Buhari’s comparison of Saudi with Nigeria

Bottom line

With hopes of larger stimulus checks fading, the bullish report comes as a relief and that along with the weaker US dollar should support oil prices in early Asia trade.

READ: Seplat Petroleum seals Crude Purchase Agreement with Waltersmith Petroman Oil Limited

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Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina or email [email protected] He is a Member of the Chartered Financial Analyst Society.

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Commodities

Gold’s appeal up thanks to a weaker U.S dollar

More COVID-19 relief programs pushed the yellow metal’s appeal up as an inflation hedge.

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Gold Up as U.S. hits Record Number of COVID-19 Cases, Gold stands firm above $1,800 over increasing virus fears and weaker dollar , Gold stands firm above $1,800 over increasing virus fears and weaker dollar, Gold prices surge higher, Traders focus on U.S. Federal Reserve

Gold was up at Wednesday’s trading session, thanks to a weaker dollar coupled with statements from Janet Yellen, the incoming Secretary for the U.S Treasury, calling for more COVID-19 relief programs; these helped to push the yellow metal’s appeal up as an inflation hedge.

What you should know: At press time, Gold futures were up 0.51% at $1,849.60/ounce.

  • The Secretary of the Treasury nominee made key statements during her Senate confirmation hearing held yesterday, where she discussed the economic gains of a large stimulus package that would far outweigh the risk of a higher debt burden.
  • The greenback dropped for the third consecutive trading session after Janet Yellen said in her hearing that tax cuts enacted in 2017 for large companies should be reversed.

READ: Six largest tech stocks by market value lose more than $1 trillion in 3 days

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the odds that the precious metal currently has amid a relatively strong greenback.

“Maximum stimulus overdrive, favorable to bullion turnaround in taper talk and slightly weaker dollar paint an encouraging backdrop for gold prices provided real rates oblige.

Specta

“Gold has been facing headwinds from a strong US dollar and higher real rates so far this year. The market is trying to hold the yellow metal above crucial support levels, which is encouraging,” Innes stated.

READ: Investors worry over future of Crypto under a Joe Biden Presidency

What to expect: However so far, gold has struggled to recover convincingly past the $1850 psychological level, and the 50dma around $1960 remains the ultimate target Q1 for gold bulls.

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Commodities

Oil prices rally high on incoming COVID-19 relief program

Brent oil futures gained 0.68% to trade at $56.28 a barrel adding to yesterday’s 2.1% gain.

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global oil market, Bonny Light and Brent crude oil, Arthur Eze, Nigeria cuts crude oil production to 1.77mbpd, Nigeria wants international oil companies to pay up now , OPEC+ deal gets a boost as Russia and Saudi Arabia consider further output cut, 4 key reasons why Brent crude might slip back to $35 per barrel, How substantial is compliance for the Oil market?

Oil prices were all fired up at mid-week trading session in London.

Holding on to their previous gains on reports that the incoming Joe Biden administration will offer more quantitative easing programs, boosted hopes for energy demand

What you should know: At press time, Brent oil futures gained 0.68% to trade at $56.28 a barrel adding to yesterday’s 2.1% gain. West Texas Intermediate futures rallied by 0.79% to trade at $53.40 a barrel, building on a 1.2% rise seen at the last trading session.

READ: First cargo of Nigeria’s newest crude grade, Ayala, to arrive Europe

  • Both major oil benchmarks stayed above the $50 mark.
  • The Treasury Secretary nominee, Janet Yellen advised the U.S lawmakers in acting fast on COVID-19 support packages during her Senate confirmation hearing held yesterday.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics gave valuable insights on the mindset of energy traders in regards to Saudi’s recent cut and massive stimulus package on its way to financial markets stating;

Specta

“The energy markets are racing higher out of the gates in Asia aided by a lower dollar and hopes of a sizeable economic stimulus package from the Biden administration.

READ: Covid-19: Nigerian government explains how it will fund proposed N2.3 trillion stimulus

“Energy traders are packing in a chunky stimulus-response that might matter to investors from both a commodity and currency perspective where the US dollar could weaken to oil prices benefit since crude is priced in US dollars.

“The most favorable elixir of US stimulus and the imminent Saudi production cut bolstering efforts of OPEC+ to keep supply well below demand this year continue to help price action.”

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READ: Non-oil sector is critical to Nigeria’s economic recovery in 2021 – Cordros Capital

What to expect: Ahead of presidential inauguration day, Oil traders offer up a Biden policy seal of approval on the agenda’s sequencing with vaccinations plus stimulus now and taxes later, to drive risk through the first half of 2021.

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Commodities

Oil traders weigh if COVID-19 support programs will buoy economic growth

Brent oil crude futures gained 0.40% to trade at $54.95 while WTI futures were dropped 0.23% to trade at $52.30 a barrel.

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Oil prices were mixed at the second trading session of the week. Oil traders are cautiously optimistic that further COVID-19 stimulus programs will buoy economic growth against the increasing COVID-19-induced lockdowns sighted in key international markets.

What you should know

At press time, Brent oil crude futures gained 0.40% to trade at $54.95, while West Texas Intermediate futures dropped by 0.23% to trade at $52.30 a barrel. There was no oil settlement transaction on Monday at the world’s largest economy, due to public holiday.

READ: Nigeria’s GDP growth to rebound between 1.7% and 2.0% in 2021 – United Capital report

  • Both global oil benchmarks remained above the $50 mark.
  • In addition, oil traders are treading cautiously on reports that the third-largest crude oil importer, India, recorded poor fuel sales in 2020, as well as rising numbers of COVID-19 cases in Japan and China.

What they are saying

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, dropped valuable points as regards macros weighing the black liquid hydrocarbon, taking to account the U.S dollar recorded losses at Tuesday trading session, thereby arbitrarily supporting crude oil prices.

  • “Many COVID-19 jitters out here, but oil prices continue to hold and looks to nudge higher eyeing support from the weaker US dollar as oil sensitive currencies are showing the way. The US data has been less encouraging lately. However, yesterday’s Q4 China GDP data provided a festive reminder that China’s economy continues to fire on all cylinders and brought with it dip-buying support.
  • “Overall, the policy mixes between OPEC+ current supply discipline coalescing with the Biden’s administration’s overarching focus on public health and economic responses to the COVID-19 pandemic, suggest oil prices can go much higher.”

READ: Non-oil sector is critical to Nigeria’s economic recovery in 2021 – Cordros Capital

Specta

What to expect

Oil traders anticipate that oil prices will stabilize near the current level, as progress is made on the COVID-19 vaccine roll-out. As the black liquid hydrocarbon moves closer on the path to a typical demand environment, oil prices will then soar.

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