Crude oil prices rallied high at the last trading session of the week, nearing the $60 price level amid leading producers’ commitment to continued supply cuts and positive signs at the world’s largest economy’s recovery.
What you must know: At the time of writing this report, Brent crude futures traded at $59.24 a barrel and West Texas Intermediate futures rose by 0.73% to $56.64 a barrel.
- Oil traders are going long on hopes that a $1.9 trillion stimulus package proposed by Joe Biden last month would see the light of day. Stronger-than-expected orders for U.S. goods in the month of Dec also boosted bullish sentiments across the market spectrum.
- OPEC+’s most recent attitude has been a real positive for crude oil prices, on the account of Saudi Arabia, a leading oil producer, already curbing its oil production by about 1 million barrels of crude oil.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave key insights on macros pushing oil prices at yearly highs.
“There was a nice V-looking chart for WTI today with the commodity hit on the release of the EIA’s Annual Energy Outlook 2021 (projecting it will take years to get back to 2019 levels of US energy consumption), only to quickly bounce back.
“Oil spent much of New York session above WTI U$56 a barrel, extending gains from Wednesday when OPEC+ maintained oil output cuts, as optimism over a much-discussed US stimulus package also proved supportive.
“When demand drives commodity prices, it has a more bullish impact and leaves a more lasting reflection on price action.”
What to expect: The full OPEC+ ministerial meeting in early March could be more difficult because production increases will likely be on the table, especially if oil prices continue to trend up.
Oil prices near $70 a barrel, rising for a 7th week in a row
For the week, Brent crude gained 5.2%, rising for the 7th week in a row for the first time since December,
Crude oil prices were all fired up at the last trading session of the week, hitting their highest levels in more than a year.
Oil prices are on yearly highs as recent data in the world’s largest economy revealed a stronger-than-expected U.S. jobs report, coupled with a decision by OPEC+ to keep the status quo.
For the week, Brent crude prices gained 5.2%, rising for the 7th week in a row for the first time since December, while WTI surged by 7.4% after gaining almost 4% last week.
At the end of the Friday trading session, Brent Crude futures gained 3.9%, to settle at $69.36 a barrel. The session high for Brent crude was its highest since January 2020.
Also, the U.S based oil contract, U.S. West Texas Intermediate futures, rallied by 3.5% to settle at $66.09 a barrel.
In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, gave key insights on OPEC+ supply dynamics at the world’s biggest commodity market.
“Saudi Arabia seems to have used its 1mb/d voluntary cut as a bargaining chip to persuade most OPEC+ members not to raise production and also appears to have reiterated the desire to see compensation cuts from OPEC+ participants who have produced above quota so far.
“Oil soared as the rest of OPEC+ holds steady at current production levels. Saudi Arabia’s output will start to phase back in from May and it seems likely increases will be permitted across the whole of OPEC+.
“Driven by a need to benefit from higher oil prices, Russia desires to raise production amid concerns about sending the wrong signal to US shale producers. At the same time, Saudi Arabia says shale is “not on the radar” as a risk.”
What to expect: Oil traders in the mid-term would place their gaze on the next meeting scheduled to hold in April, where energy prices will pose a volatility tango all over again.
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.
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.
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.”
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.
Nairametrics | Company Earnings
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- Seplat falls into a loss in FY 2020
- 2020 FY Results: Cornerstone Insurance Plc reports a 61.1% decline in profit
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- 2020 FY Results: Nigerian Breweries reports a 54.3% decline in profits in 2020
- Abbey Mortgage Bank projects N51.08 million profit in Q2 2020.