Oil Extends Decline as Rising U.S. Production Weighs

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On Monday, oil prices prolonged declines, pulled down by indications of growing production in the United States that  would partially offset output cuts by the Organization of Petroleum Exporting Countries and other producers.

After President Donald Trump presented immigration curbs that generated criticism at home and abroad, uncertainty over the outlook for U.S policy also broadly influenced  the financial markets.

Oil trading was quiet with some Asian countries, including China, on holiday for the Lunar New Year. After the opening bell on Monday, the delivery of NYMEX crude for March declined 27 cents at at $52.90 a barrel.

Global benchmark Brent crude oil prices declined 25 cents at $55.26 a barrel at 1010 GMT, while U.S. crude futures fell 8 cents to $53.09.

The number of active U.S. oil rigs increased to the highest since November 2015 the previous week, according to Baker Hughes data, indicating  that drillers are taking advantage of oil prices above $50 a barrel.

The Organization of the Petroleum Exporting Countries and other producers, including Russia, agreed to reduce production by nearly 1.8 million barrels per day in the first half of 2017 to relieve a two-year supply overhang.

“We are in wait-and-see mode, I suspect at the moment. Oil has reached a fair value equilibrium level given the current supply and demand outlook,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

“Until we get anything to really disrupt that, we may not see too much change,” he said, adding the market may draw some comfort from official OPEC figures for January production.

However,  U.S. oil output has been increasing, with the International Energy Agency forecasting total U.S. production growth of 320,000 barrels per day (bpd) in 2017 to an average of 12.8 million barrels per day bpd.

“The rise in U.S. output should not be unexpected,” ANZ bank said in a note.

“However, we expect the reductions being made by OPEC will far exceed any rise in the U.S. and quickly reduce the global inventory that has been built up over the past two years,” it added.

Hedge funds and money managers boosted bullish wagers on U.S.crude oil to the highest level since mid-2014, the Commodity FuturesTrading Commission (CFTC) data showed on Friday, as agreed output cuts by the world’s top producers began to eat into a global glut.

In addition, on Sunday, President Donald Trump justified  his move to ban entry of refugees and people from seven Muslim-majority nations and stated the United States would continue issuing visas for all countries in the next 90 days as he faced increasing criticism at home and abroad and new demonstrations in U.S. cities.

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U.S. Natural Gas Futures Struggles Near Two-Week Lows During Warmer Weather

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On Monday, U.S. natural gas futures fight back near a two-week low, as predictions indicating warm weather, decreasing  in key regions in the U.S. during the next few weeks reduced demand for the heating fuel.

Delivery of natural gas for February on the NYMEX decline to a session low of $3.145 per million British thermal units, a level not perceived since January 10.

It was previously at $3.189 by 9:35AM ET (14:35GMT), down 1.5 cents, or about 0.5%.

The more-actively traded March deal declined 0.7 cents, or 0.2%, at $3.204.

The previous week, prices of the heating fuel displayed a weekly loss of over 6% on predictions for warmer winter weather.

In recent weeks, natural gas markets have been volatile, adjusting course quickly in response to shifting outlooks in near term weather patterns.

Prices normally increase during the winter as colder weather sparks indoor-heating demand. About half of U.S. homes use natural gas for heating.

Temporarily, market players looked forward to weekly storage data schedule on Thursday, which is expected to indicate a draw in a range between 105 and 117 billion cubic feet in the week ended January 20.

That compares with a withdrawal of 243 billion cubic feet in the prior week, 211 billion a year before and a five-year average decline of 176 billion cubic feet.

According to the U.S. Energy Information Administration,  total natural gas in storage presently stands at 2.917 trillion cubic feet, 12.9% lower than levels at this time a year ago and around 2.6% below the five-year average for this time of year.

On Additional News

On Tuesday, a weaker greenback supported crude prices gain in Asia with the currency on a trade-weighted basis temporarily dropping below one hundred  for the first time since mid-November before improving slightly on concerns of a major shakeup to the global trading administration.

After dropping to 99.5,  the U.S. dollar index increase 0.14% to 100.09 in early Asia. Crude is denominated in dollars, making a weaker dollar a benefit to key buyers such as China and India.

Suddenly, higher production by U.S. shale drillers and other producer countries weigh up on crude prices in the U.S. with Brent and West Texas Intermediate settling down in spite of efforts to reduce global  production by approximately 1.8 million barrels per day by OPEC and non-OPEC countries.

Global benchmark Brent crude increases 0.29% to $55.52 a barrel on London’s Intercontinental Exchange, while U.S. crude on the NYMEX increased 0.49% to $53.01 a barrel.

While Oil prices inched higher during European morning hours on Tuesday, recovering  from the previous session’s losses  during ongoing indications that major oil producers are sticking to their pledge to reduce back production.

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Gold, Copper Recover in Asia as China Data, Yellen Offer Support

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On Friday, gold and copper recovered in Asia after China reported solid gross domestic product (GDP), retail sales and industrial production and the Fed chief indicated caution in statements about the development capacity of the economy.

Delivery of gold for February on the Comex division of the NYMEX increased 0.43% to $1,206.65 a troy ounce. Copper futures increased 0.27% to $2.618 a pound.

China’s gross domestic product (GDP) raised 6.8%  YoY in the 4th quarter, slightly beating expectations by analysts of 6.7% progress for the calendar year, however,  in line with estimates from the head of China’s state planning agency.

The figures possible indicated that China’s economic development is beginning  to become stable as it transitions from heavy manufacture to domestic-led consumption.

For the quarter-on-quarter gross domestic product  (GDP) figure, the increase of 1.7% as anticipated.  Industrial production increased 6.0%, a tick below the 6.1% increase perceived, while retail sales increased 10.9%, beating the 10.7% increase anticipated.

Previously, Fed Reserve Chair Janet Yellen stated that running a “hot” economy for an extended period would be a threat.

“I think that allowing the economy to run markedly and persistently “hot” would be risky and unwise,” Yellen said in remarks prepared for delivery to the Stanford Institute for Economic Policy Research.

Although there are no indications yet, that the Fed  Reserve is behind the curve or the economy is at risk of a sudden surge in inflation, she said, “I consider it prudent to adjust the stance of monetary policy gradually over time.”

Suddenly, on Thursday, gold prices stayed under pressure during U.S. morning trade, holding on to earlier losses as investors expected additional statements from Fed Reserve Chair Janet Yellen for fresh indications regarding the timing of the next rate hike.

In statements sent to the Commonwealth Club in San Francisco on Wednesday, Yellen stated it would “makes sense” for the U.S. central bank to gradually lift interest rates with the U.S. economy close to full employment and inflation headed toward the Fed’s 2% goal.

The Fed Reserve chief stated that she and other Fed policymakers expected the central bank to boost its key benchmark short-term rate “a few times a year” through 2019. That step could change depending on how the viewpoint for the economy develops, Yellen cautioned.

The previous month, the Fed Reserve indicated  that at least three rate increases were in the offing for 2017, according to a prediction of interest rates from members of the central bank, known as the dot-plot.

However, traders stayed skeptical. As an alternative, markets are pricing in just two rate hikes throughout the course of this year, according to the reports.

Temporarily, global financial markets will continue to concentrate on U.S. President-elect Donald Trump as he takes the Oath of Office and offers his inaugural address on Friday. On Thursday,  Trump will be speaking at a pre-inauguration event in Washington DC at 11:15AM ET (16:15GMT).

Any information he may give on his promises of tax reform  will be welcome by investors, infrastructure expenditure and deregulation, in addition to insight regarding policies on China and the domestic economy.

Trump has been recognized with being a major catalyst behind the market’s remarkable rally since election day, although Trump has yet to plan his economic policies in detail.

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U.S. Natural Gas Declines to 1-Week Low on Bets For Bearish Storage Data

After the opening bell on Wednesday, U.S. natural gas futures dropped for the second day in a row, declining near one week low, as weather predictions for the end of January turned warmer, which should reduce demand for the heating fuel.

In recent weeks, natural gas markets have been volatile, adjusting course quickly in reaction to changing outlooks in near term weather patterns.

After increasing  almost 2.7% to a session high of $3.513 per million British thermal units, a level not seen since January 3, Delivery of Natural gas for February on the NYMEX declined about 3% to a session low of $3.310 per million British thermal units, a level not perceived since January 12.

It was previously at $3.320 by 9:00AM ET (14:00GMT), down 9.2 cents, or about 2.7%, after plunging 0.7 cents, or 0.2%, the day earlier.

In the meantime, market players looked forward to weekly storage data scheduled on Thursday, which is expected to indicate a draw in a range between 220 and 230 billion cubic feet in the week ended January 13.

Which compares with a withdrawal of 151 billion cubic feet in the  preceding week, 178 billion a year before and a five year average decline of 170 billion cubic feet.

Currently, total natural gas in storage stands at 3.160 trillion cubic feet, according  to the  U.S. Energy Information Administration (EIA), 10.3% lower than levels at this time a year ago and approximately 0.1% below the five-year average for this time of year.

On Additional News

Crude oil prices inched higher in Asian trade on inspiring statistics,  which indicated oil production by the OPEC was dropping, pushing the market closer towards a rebalance.  However, any increase could be balanced by the possible expansion in U.S. shale oil output.

On the NYMEX, light, delivery of sweet crude futures  in February CLG7, +1.31%  traded at $51.52 a barrel, up $0.44, or 0.9%, in the Globex electronic session.

March Brent crude LCOH7, +1.52%  on London’s ICE Futures exchange rose $0.49, or 0.9%, to $54.41 a barrel.

According to OPEC’s recent data, the production by the 13-member bloc contracted by 221,000 barrels a day in December from the prior month. Generally, the cartel produced nearly 33.1 million barrels a day in December.

The group still needs to reduce to approximately 31.8 million barrels a day in order to meet the level it promised in its output cut agreement signed the previous year.

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Precious Metals Gain Strength with Trump, Yellen in Focus

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Gold prices prolonged the current rally to a seventh  day on Tuesday, it was the longest bounce of increased since November, as the U.S. dollar declined during lasting doubt over Trump’s economic policies.

On Wednesday, gold prices increased in Asia with investor’s focus on the upcoming inaugural address by President-elect Donald Trump and Fed Chair Janet Yellen who is expected to talk about monetary policy goals.

Gold held near eight week peaks in the prior session on improbability over US president-elect Donald Trump’s economic ideas, after the greenback  declined on his statements that the strong dollar was “killing us”.

Amid the rally of gold prices, the dollar index dropped to as low as 100.44, a level not perceived since December 8. It was previously at 100.60, down nearly 0.9%.

Delivery of gold for February on the Comex division of the NYMEX increased 0.11% to $1,214.15 a troy ounce with silver futures for March delivery increased 0.14% to $17.172 a troy ounce during morning hours in New York.

Copper futures inched up 0.08% to $2.261 a pound after average new house prices in China’s 70 major cities increased 12.4% in December from a year before, slowing a little from a 12.6% surge in November.

Spot gold was steady at $1,216 per ounce by 0110 GMT. Bullion hit an eight-week peak of $1,218.64 in the prior session. US gold futures increased 0.3% at $1,216.10 per ounce.

In the meantime, as of this  writing platinum declined 0.55% to $977.60, while palladium after increasing 1.1% to $757.50 an ounce, suddenly plunged 0.9% to $746.42 an ounce.

The Fed Reserve had specified in December that about three rate increases were likely to happen soon in  2017, according to the reports.

However, traders remained skeptical. Instead, markets are predicting just two rate hikes all through the course of this year.

An interruption in increasing  interest rates would be perceived as positive for gold, a non-interest-bearing asset, and negative for the greenback.

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