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Commodities

Oil prices rally up as market looks to OPEC+ meeting

WTI futures traded at $48.85 a barrel thereby printing a gain of 0.68% and Brent crude futures gained 0.69% to trade at $51.80 per barrel.

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OPEC+ Alliance, US, Russia, Canada, Mexico reach historic deal to cut 13.4 million bpd, Oil market still uncertain over the OPEC+ deal as prices react positively, 7 oil producing countries most affected by covid-19, see where Nigeria is placed

Crude oil futures started the first trading session of 2021 rallying higher, as the market looks to today’s OPEC+ meeting for the next direction.

What you should know: At the time of writing this report, West Texas Intermediate futures traded at $48.85 a barrel thereby printing a gain of 0.68% and Brent crude futures gained 0.69% to trade at $51.80 per barrel.

READ: Oil prices hit $50/barrel for the first time since March

With the oil market just re-opening after shutting down for the New Year’s Day holiday, the next important driver is likely to be the OPEC+ group meeting scheduled to hold today, where ministers will decide on production quotas for next month.

In a note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, spoke on the prevailing market sentiments supporting oil prices for the near term:

Specta

For Context Read: Oil prices drop amid curb on air travels

“Following broader market sentiment out of the gates, oil prices have risen. Still, gains could be limited as politicians get handcuffed into tighter mobility restrictions as countries worldwide look to re-impose lockdown. And with contagious mutations now ravaging the EU, several major oil-consuming countries are expected to extend current lockdowns.

“Members of the OPEC group of oil producers and their partners will meet via videoconference on Monday to decide on production levels for February.

READ: DPR shortlists 161 firms for last stage of marginal oilfield bid round

“Although prices have been stabilizing higher due to the vaccine optimism, the market has not turned the corner just yet on Covid-19 uncertainty to warrant anything other than OPEC drip-feeding barrels back to the needs monthly.”

READ: Marketers advise government on how to curb smuggling of petroleum products

What to expect: While it is increasingly clear that 2021 global demand for energy will likely be above supply if the oil cartel group can hold on together, limiting downside risk in oil, near-term catalysts due to the new contagious COVID-19 mutations are more likely to be negative than positive for short term oil prices.

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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 traders remain cautious despite urgency in $1.9 trillion stimulus plan

Gold traders are of the bias that the precious market is heading from neutral to bearish…

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gold, Gold fast losing the battle to Bitcoin

Gold prices at Tuesday’s trading session moved slightly higher, despite the White House’s recent statement that there’s an “urgency” to passing the $1.9 trillion stimulus plan.

What you should know: At press time, gold futures were trading at around $1860/ounce.

Gold bug’s upside this week seems to be curbed in spite of its surge last week when it rose more than $26, or 1.4%, after losing almost 3.5% in two previous weeks combined.

  • Gold traders are of the bias that the precious metal’s market is heading from neutral to bearish as recent price action reveal the potential head and shoulders chart pattern continues to form on the daily charts, and energy is building during consolidation.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke in detail on macros that could put gold prices upside limited at least for the near term:

“Gold conceded ground to stronger dollar overnight but remains bid against escalating US-China tensions over Taiwan. Gold is struggling to break out. Most short-term fundamentals suggest upside from here, but extended speculative positioning is acting as a drag.

Specta

“We will see what progress is made on the US USD1.9 trillion fiscal stimulus package during the remainder of the week. Presumably, the smoother it passes, the more favorable for gold.”

What to expect: On the central bank front, the highlight is the FOMC decision. The FOMC meeting should be gold supportive, but not new news. Robust GDP data could weigh on gold if yields react higher.

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Commodities

Oil prices fall under pressure over rising number of COVID-19 cases in China

Brent crude was down by 0.24% to trade at $55.12 barrel, and WTI futures inched down by 0.10% to $52.22 a barrel.

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Crude Oil worker, OPEC, oil prices, Bulls hit back to support US crude oil amid panic sell- offs in global equity markets, Nigeria’s local oil players smashed by low crude oil prices

Oil prices drifted lower at the first trading session in London, recording a second consecutive trading session of losses, as the ever-rising number of COVID-19 cases, particularly in China, raise energy demand fears.

What you should know: At the time of writing this report, Brent crude was down by 0.24% to trade at $55.12 barrel, and West Texas Intermediate futures inched down by 0.10% to $52.22 a barrel.

China’s National Health Commission revealed that the world’s largest importer of oil recorded 124 cases on Jan. 24, up from 80 earlier, which is the worst wave of new COVID-19 infections seen since March 2020.

READ: COVID-19 mutant strain causes chaos at Oil markets

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on current fundamentals weighing on oil prices, at least for the near term. In addition, he spoke on how the COVID-19 pandemic seemed to distort the bullish rally.

Specta

“The Lunar New Year headline heebie-jeebies did a number on oil prices into weeks end. Yet after hitting an intraday low US$54.48 per barrel, Brent crude managed to close above US$55 despite the clear demand impacts of lockdowns in Europe and additional measures in China.

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

The enormous question mark remains around demand and supply.

  • The street uniformly downgraded Q1 21 market in the world ex-China due to clear demand impacts of lockdowns in Europe to start the year. But last week it was back to the downward demand revision drawing board.
  • More worryingly, however, since Asia has been the backbone of physical crude oil demand, this time it was to down-ballot China consumption as lockdowns spread in the country just weeks ahead of the Lunar New Year travel surge.”

READ: Young Nigerians share their experiences on the cost of working from home

What to expect: Still, the one million barrels per day of additional Saudi curbs over February and March should alleviate the currently projected level of attrition in global demand recovery without much impact on the path of OECD inventory draws.

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Commodities

Oil prices drop amid fears on energy demand softening

West Texas Intermediate, lost 1.6%, at $52.27 per barrel. It was WTI’s worst daily plunge slide since last Friday when it fell 2.2%.

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Crude oil prices slump, as partial lockdowns resume

Oil prices fell their most in a week after the first U.S. crude build in six weeks on the fear that the world’s largest economy might distort energy demand/supply rebalancing.

What you must know: U.S based oil contract, West Texas Intermediate, lost 1.6%, at $52.27 per barrel. It was WTI’s worst daily plunge since last Friday when it fell 2.2%.

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

  • But for the week itself, the U.S. crude contract lost about 0.2%.
  • British based Brent, the global benchmark for crude, settled  1.4%, at $56.10.
  • The gain in crude oil inventories coincided with President Joe Biden’s recent statements calling on its citizens for tough days ahead from the Covid-19, which could kill up to about half a million Americans.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave valid insights on the effect COVID-19 and other macros have on oil prices.

READ: FIRS hits 98% of target as it collects N4.95 trillion for 2020 fiscal year

Specta

“Oil prices look a tad vulnerable to potential profit-taking after US crude stockpile bearishly rose 2.56 million against consensus draw. Simultaneously, the near-term China crude demand forecast looks high and susceptible to revision lower as lockdown spread in the country ahead of the Lunar New Year

.“While oil traders see through longer lockdowns on the premise that vaccinations will quickly lead us out of the pandemic, COVID mobility clampdowns still hurt the very near-term view.

READ: Bitcoin, Gold, leading Stocks tumble on strong U.S dollar

“And since calls for a commodity supercycle have been many after the November vaccine turnaround, open interest in Brent and WTI has increased hugely, suggesting that the market remains very susceptible to any potential bearish headlines big or small, from a positioning perspective alone.”

What to expect: OPEC production at the moment remains well below the level required to meet anticipated demand. It should continue to drive a reduction in oil inventories as the global economy gradually recovers.

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