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Commodities

Oil prices up, Saudi Aramco says energy demand will soon return to pre-COVID-19 era

The world’s leading oil giant, Saudi Aramco, has predicted that energy demand will return to pre-COVID-19 levels later in 2021.

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The world’s most profitable company keeps delaying its IPO , Saudi Aramco in the world’s largest IPO raises $25.6 billion surpasses Alibaba

Crude oil prices rallied to their highest level in more than two weeks, as expectations strengthened on energy demand picking up globally.

At the time of writing this report, the British based oil contract, Brent crude, rallied by 0.78% to trade at $56.77 a barrel, while West Texas Intermediate futures gained 0.80% to trade at $53.98 a barrel.

The world’s leading oil giant, Saudi Aramco, has predicted that energy demand will return to pre-COVID-19 levels later in 2021, adding that it is confident the worst of the COVID-19 pandemic is now in sight.

READ: Crude oil prices high on Saudi’s pledge

What you must know: Saudi Aramco is the national energy company of Saudi Arabia and the most valuable energy company. It produces five grades of crude oil and natural gas liquids.

  • It also produces refined energy products that include liquefied petroleum gas, ethanol, naphtha, and other products.
  • It exports about 75% of its crude oil to foreign markets, most often with its oil tankers. Saudi Aramco has access to crude oil reserves of about 260 billion barrels, the largest in the world.

READ: UN tasks developed countries to fulfil $100 billion pledge for climate change

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on key drivers that gave oil prices the needed boost to stay relatively higher:

“And with the JMMC unlikely to signal any need to rock the boat, price planks are all in place with the street awaiting word on the US stimulus deal for the next bullish impulse.

“With the week dominated on the supply headline front with JMMC on tap, OPEC+ didn’t disappoint as the production group’s compliance level turned more than a few oil traders’ heads on a swivel overnight.

“Oil rallied as OPEC+ production compliance, ringing in at 99 % helped lift prices even in the face of a stronger US dollar. Demand in the physical market has been the driver of a strong front of the curve.”

READ: Presidency questions how many Nigerians have cars, generators, defends fuel price hike

What to expect: Oil traders are now anticipating that downside risk on oil prices remains limited unless there is a material change in expectations for the duration of the pandemic’s impact on demand.

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

At the time of writing this report, the blinky metal at the futures market was trading at $1,796.40 per ounce.

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gold, Gold fast losing the battle to Bitcoin

Gold drifted below the $1,800 price level at the fourth trading session of the week due to higher U.S. Treasury yields. Also, U.S. Federal Reserve Chairman, Jerome Powell, maintained that the current ultra-easy monetary policy paused buying pressure on the yellow metal’s appeal.

At the time of writing this report, the blinky metal at the futures market was trading at $1,796.40 per ounce.

What you need to know: Usually, higher inflation boosts the price of the precious metal in principle, but also helps U.S Treasury yields (gold’s arch-enemy), which in turn helps the opportunity cost of holding the safe haven shinny asset.

READ: Gold suffers its worst January performance since 2011 amid rising U.S dollar

The U.S Fed Chief recommitted to getting the world’s largest economy back to full employment during his testimony before the House Financial Services Committee.

He tried calming fears about inflation in the $20 trillion powered economy, emphasizing that he would only start worrying about it if prices began to rise in an aggressive and troubling way.

Benchmark U.S. Treasury yields are currently at the highest levels in a year.

Stephen Innes, Chief Global Market Strategist at Axi, gave further insights on the political macro condition that could determine the precious metal’s future, at least for the midterm, knowing fully well that gold is priced in the U.S dollar.

READ: Nigeria’s first and largest industrial-scale gold mine set to be completed in first half of 2021

“Gold broke below USD1,800/oz. Such a break below that level this month has done some psychological damage to the market, I believe.

“On the political side, President Biden’s incentives look fully aligned with getting the US economy and populations as healthy as possible ahead of the 2022 mid-term elections.

“If both fiscal and monetary policy makes maximum efforts into a post-pandemic recovery, then at the very least we will get temporary inflation along with plenty of debate whether it might become more permanent.

READ: Gold fast losing the battle to Bitcoin

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Bottom Line
Gold traders are not keen on going bullish, at least for the near term, on the bias that rising U.S Treasury yields see investors showing less interest in the yellow metal.

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Commodities

Oil prices drop as gasoline demand from U.S refineries remain poor

Oil prices suffered significant losses at the mid-week trading session in London.

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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 suffered significant losses at the mid-week trading session in London. Oil traders are virtually going short on macros revealing an unexpected build in U.S. crude inventories.

The surge in U.S oil inventories was attributable to the unprecedented cold snap that hit a key energy hub in the world’s largest economy during the previous week thereby pausing gasoline demand from refineries that were forced to close down.

At the time of writing this report, Brent crude was down 0.60% hovering around the $64 per barrel.

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

However, both major oil benchmarks remained above the $60 price levels.

The most recent data from the American Petroleum Institute revealed a surge of 1.026 million barrels for the week ending Febuary.19. Oil experts had earlier anticipated a 5.372-million-barrel drop.

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on prevailing market conditions weighing on the black hydrocarbon

READ: Gold traders go wary over rising U.S. Treasury yields

“With excessively stretched positioning and highly susceptible to any negative news, WTI dropped towards the $61 level after the API stockpiles jumped +1.026 million barrels versus the previous draw of 5.8 million barrels during the period ended on February 19.

“Although the commodity prices dropped following the bearish stockpile data, bulls probably won’t be charging back to the pen en masses as the smoldering embers around the Middle East powder keg threaten to ignite once again as the US-Iran conflict continues to simmer but at a higher heat level today.”

READ: World’s largest oil producer loses four million barrels per day

What to expect: Still, Oil pundits expect more visibility on oil traders move at the end of next week with the next round of monthly OPEC+ meetings. Outside of a rise in geopolitical risk, upside momentum could be limited in the coming days as oil traders wrestle with OPEC+ next move.

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