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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.

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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 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.

READ: DEAL: Heirs Holdings acquires 45% of OML 17 from Shell, Total and Eni

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.

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. He is a Member of the Chartered Financial Analyst Society.

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Commodities

Gold drops to a nine-month low, U.S Fed Chief disappoints metal buyers

Gold futures were down 0.63% to trade around $1,690 an ounce. Gold prices dropped to their lowest since Jun. 8, 2020.

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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

The yellow metal drifted lower at the last trading session of the week staying near a nine-month low and headed for a third consecutive weekly drop. U.S. Federal Reserve Chairman, Powell disappointed metal traders on his perception of Treasury yields pushing both the greenback and bond yields up.

At the time of writing this report, Gold futures were down 0.63% to trade around $1,690 an ounce, dropping below the $1,700 price levels. Gold prices dropped to their lowest since Jun. 8, 2020, and have lost about 2.3% for the week so far.

The U.S. 10-year Treasury yield peaked at about 1.5%, while the dollar, which usually moves inversely to gold, bounced up at morning trading session in London.

READ: Gold breaks below $1,800 per ounce, amid rising U.S Treasury yields

The most powerful monetary policymaker affirmed his stance to keep credit loose in a speech to the Wall Street Journal jobs summit held yesterday and added that the rise in treasury yields was “notable”, he did not consider it a “disorderly” move.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics, spoke on prevailing market conditions weighing hard on the precious metal;

“Gold continues to struggle in a trend that started right out of the gates in 2021. And by failing to $1,700 this week, the sell-off may continue.

Rising bond yields and a stronger US have been the most significant obstacle while overall economic conditions improve as the trifecta Covid-19 vaccines roll out in the US.”

READ: Robinhood restricts trading Dogecoin after gaining 1,000%

Bottom line: Metal investors have increased their sell-off in metals momentarily, with nickel the worst hit of all with $1,500 drops two days in a row.

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Commodities

OPEC+ agrees to keep Oil output unchanged, Oil up 4%

Brent Crude was up more than 4% trading around $67 a 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

Oil prices were all fired up at Thursday’s trading session, amid reports revealing OPEC+ agreed to Keep oil output unchanged in April.

What you should know: At the time of writing the report, Brent Crude was up more than 4% trading around $67 a barrel.

OPEC, Russia, and other oil producers on Thursday agreed to keep the status quo unchanged thereby pushing oil past its highest level since January 2020.

This is coming as a big win for the Saudis, which of late has been bent on keeping oil output in check.

Sequel to this landmark feat on keeping oil supply squeezed, OPEC+ had been debating and considering if it was ideal to restore as much as 1.5 million barrels a day of output.

However, the Oil Sherrif in the person of Saudi’s Energy Minister Prince Abdulaziz bin Salman urged other leading oil producers in keeping the status quo with the exception of slight increases granted to the Russians and Kazakhstan.

 

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