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Commodities
Crude oil prices high on Saudi’s pledge
Brent crude futures gained 0.63% to trade at $54.72 a barrel while the WTI futures rallied by 0.61% to trade at $51.14 a barrel.
Oil prices rallied higher at the last trading session of the week. Oil traders are staying bullish on the bias that Saudi Arabia’s recent pledge to make voluntary cuts on its crude oil outputs continued to excite traders in a market that has been heavily disrupted by COVID-19.
What you should know: At press time, the British-based oil contract, Brent crude futures gained 0.63% to trade at $54.72 a barrel.
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- U.S. West Texas Intermediate (WTI) futures rallied by 0.61% to trade at $51.14 a barrel. The American contract gained 0.4% on Thursday after hitting its highest price level since February 2020 at $51.28.
- Both major oil benchmarks are on track for weekly gains of about 5% for this week.
READ: Oil traders go wary on energy demand, mutant strains of COVID-19
In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, spoke on the broader market sentiments that keep crude oil prices above $50 a barrel:
“To a large degree, oil markets continued to mimic broader markets trading off the same US stimulus impulse, while treating the latest COVID-19 scare as nothing other than a speedbump thanks to the stimulus and vaccine look through narrative.
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“Prices were underpinned by the OPEC+ meeting earlier this week as Saudi Arabia pledged to keep a lid on supply and positive mood music amid expectations of greater stimulus following the blue sweep in the Georgia Senate run-offs.
“The annual rebalancing of the major commodity indexes starts tomorrow which will unquestionably keep a bid under oil futures which are still in catch-up mode to its hard commodity and industrial metal peers.
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What to expect: Energy experts do not have definitive news that COVID-19 vaccines will not work against COVID-19 mutant variants, though traders will buy the oil market dips knowing the vaccinations are the only way out of the COVID abyss in 2021.
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%.
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.
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“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.
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“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.
Commodities
Gold prices pull back after hitting highest levels in 2 weeks
Spot gold was down by 0.4% to trade at $1,862 per ounce after hitting its highest since Jan. 8 at $1,874.50 earlier in the session.
Gold prices pulled back a little of its gains recorded on Thursday, as it traded near its highest level in nearly two weeks.
The greenback’s slight rebound at Asia’s trading session on Friday dented the precious metal’s upsides.
Gold prices have been rallying high on reports that President Joe Biden’s administration would push for more quantitative easing programs in order to support the world’s biggest economy.
READ: Gold rebounds strongly amid COVID-19 crisis
At the time of drafting this report, Spot gold was down by 0.4% to trade at $1,862 per ounce after hitting its highest since Jan. 8 at $1,874.50 earlier in the session.
What you must know: It’s key to note that the precious metal typically moves in the opposite direction from global stock markets, especially the American and European stock markets.
- Humans are emotionally and physically drawn to gold. It provides a significant store of value.
- Global Investors buy gold mainly to hedge against inflation.
READ: Gold on a grand slam win, gains $40 per ounce
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the recent price movements prevailing at the precious market;
“Gold bears have entered a temporary state of hibernation. The yellow metal seems to be past the lows for the month as the current ” everything but the kitchen sink ” policy backdrop and FX tailwinds for precious metals remain favorable.
READ: Gold rockets above $1850 as it continues 9-year high
“Resistance lies at the 100-day moving average at $1884. But the market needs a few more ounces of policy conviction for a break higher. Treasury yields should dictate the direction of bullion and a rally could quickly ensue if further inflation expectations kick in.”
Bottom line: The yellow metal bugs are still in play, at least for the slightly longer horizon, given that global central banks are likely to stay dovish for an extended period of time.
Commodities
Oil prices tumble on fears that energy demand is dropping
Oil prices drifted lower after digesting a surprising build in U.S. crude oil inventories that re-ignited fuel demand anxiety.
Oil prices drifted lower at the fourth trading session of the week, after digesting a surprising build in U.S. crude oil inventories that re-ignited fuel demand anxiety.
What you should know: At the time of drafting this report, Brent crude prices dropped by 0.37% to trade at $55.87 a barrel, and West Texas Intermediate futures plunged by 0.34% to trade at $53.13 a barrel.
- Oil prices gave up some of their previous gains made on hopes of a massive COVID-19 stimulus program under U.S. President Joe Biden, although both oil major benchmarks were trading far above $50/barrel.
- Recent data obtained from the American Petroleum Institute revealed a gain of 2.562 million barrels for the week ending January 15. This was against the 300,000-barrel drop in forecasts prepared earlier by some energy experts.
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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.
“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: Gold prices stay firm, investors await Janet Yellen’s speech
“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.
