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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December 12 to 16 Weekly Outlook: Gold / Silver / Copper futures

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On Friday, gold prices reach fresh 10-month lows and the precious metal published its fifth straight weekly dropped as projections of higher U.S. interest rates continued to weigh.

Deliver of gold for February settled down 0.94% at $1,161.4 on the Comex division of the New York Mercantile Exchange.  It was the metals lowest close since February 5. During the week, gold declined 1.34%.

On Friday, the greenback increase during widespread anticipations that the Fed Reserve will hike interest rates at the end of its policy meeting on Wednesday.

Investors are pricing in a 100% possibility of an increase at the meeting, according to the reports.

The U.S. dollar index, that gauges the dollar’s strong point against a trade-weighted basket of six major currencies, increased 0.48% to 101.60 late Friday. For the week, the index increased 0.75%.

Higher rates increase the dollar by making the currency more eye-catching to yield-seeking investors.

Both a strong greenback and higher interest rates are normally bearish for gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs increases.

Gold prices have dropped since Donald Trump was elected president as increasing U.S. bond yields and a rally in stock markets have restrained its appeal.

Somewhere else in metals trading, delivery of silver in March declined 0.94% at $16.93 a troy ounce, while delivery of  copper for March settled at $2.65 a pound.

Platinum dropped 2.3% to $916.1 and palladium ended at $731.0 an ounce, after declining to its lowest since November 18 in the prior session.

In the week onward, investors will be looking for possible indication from the Fed on the pace of rate hikes the upcoming year and market observers will be awaiting a number of U.S. economic reports, including figures on retail sales and inflation for fresh indications on how the economy is performing in the final quarter.

On Additional News

On December 12, Japan is to post data on core machinery orders and producer prices.The U.K. is to post industry data on house prices.

On Tuesday, December 13, China is to produce  statistic on industrial output and fixed asset investment. The U.K. is to report on consumer price inflation. The ZEW Institute is to report on German economic sentiment.

On December 14, Japan is to post the Tankan manufacturing and non-manufacturing indexes.

The U.K. is to publish its carefully observed monthly jobs report.

The U.S. is to post data on retail sales, industrial production and producer prices.

The Fed Reserve is to post its benchmark interest rate and announce updated economic projections. Fed Reserve Chair Janet Yellen will hold a press conference to outline economic conditions and the factors influencing  the monetary policy decision.

On December 15, Australia is to post its monthly jobs report.  The euro zone is to post its preliminary estimates on private sector business activity.

The Swiss National Bank is to declare its latest monetary policy decision and hold a press conference to talk about the economic outlook.

The U.K. is to release data on retail sales and the Bank of England is to declare its current monetary policy decision.  Canada is to post data on manufacturing sales.

The U.S. is to publish a raft of data, together with reports on consumer prices, jobless claims and manufacturing activity in both the Philadelphia and New York regions.

Friday, December 16, the euro zone is to publish revised data on inflation.

The U.S. is to round up the week with reports on building permits and housing starts.

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Gold and Copper Post Mild Increase after Upbeat China Trade Data

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On Thursday, gold prices increase a little in Asia after upbeat trade statistic from China sustained demand hopes, although copper stayed a bit higher in spite of an impressive increase in imports in November.

Gold futures for February on the Comex division of the New York Mercantile Exchange increased 0.11% to $1,178.85 a troy ounce.

Somewhere else in precious metals trading, delivery of silver futures for March declined 0.22% to $17.237 a troy ounce, while delivery of copper futures  for March increased 0.04% to $2.648 a pound.

China reported its trade balance for November as an excess of $44.61 billion, compared with a surplus of $46.30 billion seen and exports posted a slight surge of 0.1%, beyond the decline of 5.0% projected, while imports increased 6.7%, beyond 1.3% declined seen.

The data showed copper imports increased 31% in November from the prior month to 380,000 tonnes, the highest since June on construction demand.

Suddenly, gold prices edged higher on Wednesday, however,  increased seen possible to stay limited as expectations for an interest rate increase by the Federal Reserve the upcoming  week weighed on the precious metal.

Gold stayed under pressure ahead of an anticipated interest rate hike by the U.S. central bank at its Dec. 13-14 meeting with a stronger greenback also hitting sentiment as the precious metal is priced in greenbacks.

Figures on Tuesday presented that U.S. factory orders increased at the fastest rate in nearly one-and-a-half years in October added to indications that the manufacturing sector is improving and fed into expectations for a rate increase.

On Additional News

On Thursday, oil prices increased in thin trading  after steep declines in the prior session, supported by a sluggish dollar, positive economic data and a decline in U.S.crude stocks.

International Brent crude futures were trading up 4 cents at $53.04 a barrel at 0345 GMT after closing the prior session down 93 cents.

U.S. benchmark West Texas Intermediate crude oil prices increased 14 cents to $49.90 a barrel after ending down $1.16.

Crude oil inventories in the U.S. declined to 2.4 million barrels in the week that ended on Dec. 2, compared with analyst anticipation for a draw of 1 million barrels.

However, stocks at the Cushing, Oklahoma, a delivery hub for U.S. crude futures, increased by a hefty 3.8 million barrels the previous week, the most since 2009, according to data from the U.S. EIA on Wednesday.

“Oil prices are being supported by a raft of factors including underlying strength in the U.S. economy shown in better than expected factory and nonfarm payroll data and Chinese regulators’ attempts to cut excess supply in steel and other industries,” said Michael McCarthy, chief market strategist at Sydney’s CMC Markets.

“While OPEC’s decision to curb output is grabbing the headlines traders feel this should be balanced against a lot of more positive economic data,” he said.

Oil prices have increased since the Organization of Petroleum Exporting Countries (OPEC) and Russia reached a landmark deal the previous week to reduce production to erode a global supply overhang and prop up prices.

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Oil Prices Decline on U.S. Crude Stock Build, OPEC Remains in Focus

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On Thursday, crude oil futures decline after approved inventory reports signaled a larger than anticipated build in U.S. oil stocks.

Crude inventories in the United States increased  by 5.3 million barrels during  the week to Nov. 11, compared with expectations for an  upsurge of 1.5 million barrels.

According to data released by the U.S. Energy Information Administration on Wednesday, the increase in inventories was mainly because of the higher imports that averaged 910,000 barrels per day (bpd),

U.S. benchmark WTI crude  declined  11 cents, or 0.24%, at $45.46 a barrel at 0040 GMT. European ICE Brent  crude futures decline 16 cents, or 0.34%, to $46.47 per barrel.

“Crude oil struggled to keep its head above water after the weekly EIA showed another large rise in inventories … Stocks of crude oil jumped 5.27 million barrels, much more than expected,” Australian bank ANZ said in a note.

Refining margins in all five U.S. regional petroleum districts decline in the week ended Nov. 11, Credit Suisse stated in a weekly report on Wednesday.

“The U.S. EIA produced a higher than expected crude inventory figure, but this was subsumed into OPEC gossip,” said OANDA senior market analyst Jeffrey Halley. “We are well into headline trading season as Nov. 30 approaches.”

Organization of Petroleum Exporting Countries (OPEC) countries are ready to reach a “forceful” deal on reducing oil production, Venezuelan President Nicolas Maduro said on Wednesday, after a meeting with OPEC Secretary-General Mohammed Barkindo in Caracas. Organization of Petroleum Exporting Countries (OPEC) members are due to meet on Nov. 30.

On Additioanal  News

Delivery of crude oil for December on the NYMEX decline 0.26% to $45.45 a barrel. Delivery of Brent oil for January on the ICE Futures Exchange in London was last cited at $46.46 a barrel, up 0.22%.

On  Wednesday, oil prices added to losses during North American hours, dropping  to the lowest levels of the session after data presented  that crude supplies increased the 3rd straight week.

The U.S. Energy Information Administration said in its weekly report that “crude oil inventories rose by 5.3 million barrels in the week ended November 11. Market analysts’ expected a crude-stock gain of 1.5 million barrels, while the American Petroleum Institute late Tuesday reported a supply increase of 3.7 million barrels.”

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, upsurge by 691,000 barrels the previous week,  the Energy Information Administration stated. Total U.S crude oil inventories raised at 490.3 million barrels as of last week, which the EIA considered to be “historically high levels for this time of year”.

The report also presented that gasoline inventories,  improved by 0.7 million barrels, compared to anticipation for a decline of 0.4 million barrels.

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