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Monday, 22 May 2017

Best Commodity Tips
Oil prices fall as White House proposes U.S. oil reserve sales

Oil prices fell on Tuesday after U.S. President Donald Trump proposed the sale of half the country's strategic oil reserves in his budget plan, just as producer club OPEC and its allies are cutting output to tighten the market.After rising in Asian morning trading, Brent crude futures LCOc1 reversed their gains and were at $53.66 per barrel at 0232 GMT, down 21 cents, or 0.4 percent, from their last close.U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $50.94, down 19 cents, or 0.4 percent.

The White House plan would gradually sell off half of the nation's emergency oil stockpile to raise $16.5 billion from October 2018, documents released by the administration late on Monday showed. budgets are often ignored by the U.S. Congress, which controls federal purse strings.The plan was released just a day after Trump left OPEC's de-facto leader Saudi Arabia for his first overseas state-visit. large release of U.S. strategic reserves would jolt oil markets, where the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, have pledged to cut supplies by 1.8 million barrels per day (bpd) in order to tighten the market and prop up prices.Traders said that as any sales would only start next year and be gradual, their impact would be bigger on longer-term prices rather than those for immediate delivery.

The U.S. strategic petroleum reserves (SPR), the world's biggest, currently stand around 688 million barrels, a week's worth of global oil demand. SPR-STK-T-EIA .Virendra Chauhan, analyst at Energy Aspects, said sour crudes made up 60 percent of U.S. SPRs, while sweet crude grades made up the rest.U.S. production C-OUT-T-EIA is already at 9.3 million bpd, not far off levels of top suppliers Saudi Arabia and Russia.

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Friday, 19 May 2017

Best Commodity Tips

OPEC may get its members to agree to continue to tamp down oil production, but it will be a Pyrrhic victory.

The biggest threat to the 13-member group's dominance has been US shale. In November 2014, the Organization of Petroleum Exporting Countries decided to keep production levels high in the hope it could maintain market share. But that was a difficult task to begin with, and since then, US shale producers have become even more efficient.

By the time OPEC reversed course in November 2016, sending oil prices up as much as 10 per cent, shale had already gained ground.

There are areas in the enormous Permian and Eagle Ford shale fields in Texas where producers can break even at prices as low as $34 a barrel, according to Bloomberg Intelligence.

And analysts now say US shale production will grow even faster than expected. Macquarie Group now thinks production will increase 1.4 million barrels a day through D ..

As OPEC and non-OPEC producers (namely Russia) cut back on production, US shale producers are moving to quickly fill the gap. Their output increase is equal to about half of the OPEC cuts and twice that of Russia's cuts, according to a report out this week by Eugen Weinberg, head of commodity research at Commerzbank.

"If the production cuts were to be extended, the participating countries would lose further market shares, which they are hardly likely to accept for any length of time,"

It isn't going to get a lot better for OPEC in 2018, either. JPMorgan is forecasting US shale to grow by 1.05 million barrels a day next year, while Bank of America Merrill Lynch has a figure of 950,000 barrels a day.

Even a "drastic" downward shift in the market conditions won't lead to a rapid collapse of US oil production, according to Rystad Energy. Many wells that have been drilled-but haven't been completed-could still be brought online profitably if the price falls to $40 or  ..

Are there any straws that OPEC and Russia can clutch? Well, yes.

OPEC and its allies can only hope that increased US production won't jeopardize its aim of bringing down global crude stockpiles to the five-year average-putting a floor under prices and making sure they don't plummet. Otherwise all the efforts of the last six months (and possibly next nine months) will be for nothing.

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Thursday, 18 May 2017

Best Commodity Tips
Oil prices climb on hopes output cuts will be extended

Oil futures rose on Friday to the highest in nearly a month on growing optimism that big producing countries will extend output cuts to curb a persistent glut in crude, with key benchmarks heading for a second week of gains.

Brent crude LCOc1 was up 34 cents, or 0.7 percent, at $52.85 at 0358 GMT. The contract earlier rose to the highest since April 21 and is on track for a 4 percent climb this week, its second week of gains.

U.S. crude oil CLc1 was up 38 cents, or 0.8 percent, at $49.73 a barrel, highest since April 26. The contract is heading for a weekly increase of 4 percent.

Since the beginning of March, crude prices have swung from over $56 a barrel to under $47 as market participants were divided over the impact of rising output from the United States versus production cuts by the Organization of Petroleum Exporting Countries (OPEC) and other countries, including Russia.

But market watchers are growing more confident that OPEC, Russia and other big producers will extend cuts of almost 1.8 million barrels per day (bpd) until the end of March 2018. U.S. producers are not party to any agreements capping production.

As with other markets, concerns about U.S. President Donald Trump's agenda amidst investigations in Washington faded into the background.

"With the political turmoil easing in the U.S. overnight, the market will return to the fundamental drivers," ANZ said in a research note.

"This should see oil prices remain well bid, as OPEC continues to talk up a continuation of the production cut agreement," it said.

On May 25, leaders from OPEC and other producing countries will meet in Vienna to decide on output policy.

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Wednesday, 17 May 2017

Best Commodity Tips
Oil prices dip as supplies remain ample despite production cuts

Oil prices dipped on Thursday, weighed down by plentiful supplies despite an ongoing effort led by OPEC to cut production in order to tighten the market and prop up prices.

Brent crude futures LCOc1 were down 21 cents, or 0.4 percent, from their last close at $52 per barrel at 0148 GMT.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $48.88, down 19 cents, or 0.4 percent.
The downward correction partly reversed gains from the previous session when prices rose on the back of a drawdown in U.S. crude inventories and a slight dip in American production.The U.S. Energy Information Administration said on Wednesday that crude inventories USOILC=ECI fell 1.8 million barrels for the week to May 12, to 520.8 million barrels. the drawdown was smaller than expected, and many traders say there is still more oil in the system than the market can absorb.

Overall oil supplies remain ample, with large amounts of crude from the United States and other producers being shipped to the big consumer regions in northern Asia, undermining OPEC-led efforts to tighten the market.The Organization of the Petroleum Exporting Countries (OPEC) and some other producers including Russia have pledged to cut production by almost 1.8 million barrels per day (bpd) during the first half of 2016, a deal likely to be extended until the end of March 2018. producers have been quick to fill any potential supply gap.

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Tuesday, 16 May 2017

Best Commodity Tips
Oil drops on rising US crude inventory, defies expected supply cut extension

Oil prices fell 1 percent on Wednesday after data showed an increase in U.S. crude inventories, stoking concerns that markets remain oversupplied despite efforts by top producers Saudi Arabia and Russia to cut output.Brent crude futures LCOc1 were down 53 cents, or 1 percent, from their last close at $51.13 per barrel at 0028 GMT.U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $48.10, down 57 cents, or 1.1 percent, from their last settlement.U.S. crude oil inventories rose by 882,000 barrels in the week ending May 12 to 523.4 million, compared with analyst expectations for a decrease of 2.4 million barrels, data from industry group the American Petroleum Institute showed on Tuesday. rally in crude oil prices that started after news that OPEC was ready to prolong its production cut agreement stalled overnight, as the market awaits evidence of rebalancing," ANZ bank said on Wednesday.

The fall in prices came just days after Saudi Arabia and Russia said on Monday that they agreed the need for a 1.8 million barrels per day (bpd) crude supply cut by the Organization of the Petroleum Exporting Countries (OPEC) and some other producers including Russia to be extended for nine months, until the end of March 2018. extension of the supply cuts, which started in January and were supposed to end in June, are seen as necessary by some as they have not so far significantly tightened the market or propped up prices.

The International Energy Agency (IEA) said on Tuesday that commercial oil inventories in industrialised countries rose by 24.1 million barrels in the first quarter of the year, a time during which the OPEC-led production cut was already in place. this, analysts said that an extension of the supply cut was important.

"The agreement by OPEC to extend cuts into 2018 is critical," said AB Bernstein in a note."OPEC cuts will nevertheless lead to accelerated inventory drawdowns in 2H17, but the return to normalized inventories will ... drag into 2018,"

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Monday, 15 May 2017

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Oil prices build on gains on expectation of extended crude supply cut

Oil prices rose on Tuesday, extending gains after a joint announcement by top producers Saudi Arabia and Russia to push for an extension of supply cuts until the end of March 2018.Brent crude futures LCOc1 were at $52.05 per barrel at 0129 GMT, up 23 cents, or 0.44 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $49.10, up 25 cents, or 0.51 percent from their last settlement.

In order to rein in a glut, Saudi Arabia and Russia said on Monday that they agreed the need for a 1.8 million barrels per day (bpd) crude supply cut to be extended for nine months, until the end of March 2018. there is no final deal yet despite the pledge by Saudi Arabia - the world's top exporter and de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC) - and top producer Russia, as the 12 remaining OPEC members and other producers participating in the cuts have to agree to the extension during a meeting on May 25.

"As we have seen over the past six months, rising U.S. production and record inventories have kept upside limited and a nine month extension at this stage is unlikely to break that," he said.U.S. bank Goldman Sachs (NYSE:GS) said the deal "will likely further extend the oil price rebound... although the rally so far... has remained modest compared to the move that occurred last year when the OPEC cuts were first announced."Prices are up by 2.3 percent since the announcement of the planned extension on Monday, compared with an over 15 percent jump in the two days following the announcement of the initial cut on November 30, 2016.

Goldman said that beyond the ongoing rise in U.S. oil production, which is up over 10 percent since mid-2016 to 9.3 million bpd C-OUT-T-EIA , there was also an increase in output from within OPEC by members who were exempt from the cuts, or where forceful disruptions had ended, including Libya and Nigeria. bank said that "these combined volumes could largely offset the benefit of the extended cuts."
Goldman retained its average Brent price forecast for the third quarter of 2017 steady at $57 per barrel.

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Sunday, 14 May 2017

Best Commodity Tips
Oil jumps after Saudis, Russia say supply cut to be extended to March 2018

Oil prices jumped by over 1.5 percent on Monday after the Saudi Arabian and Russian energy ministers said in a joint statement that an OPEC-led crude production cut would be extended from the middle of this year until March 2018.

Brent crude LCOc1 was at $51.68 per barrel at 0327 GMT, up 84 cents, or 1.7 percent, from their last close.U.S. West Texas Intermediate (WTI) crude CLc1 was at $48.64 per barrel, up 80 cents, or 1.7 percent.

Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak met on Monday in Beijing and said that a joint deal to cut crude supplies in order to prop up the market would be extended from the middle of this year until March 2018. two ministers agreed to do whatever it takes to achieve the desired goal of stabilizing the market and reducing commercial oil inventories to their 5 year average level, as well as to underscore the determination of oil producers to ensure market stability," the joint statement said.

The Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, and other producers led by Russia, pledged late last year to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017.

The extension of the cut into the first quarter of next year will initially be on the same volume terms as before, although the ministers said they hoped other producers would join the efforts.

"The ministers also expressed optimism that a wider circle of countries outside the current group will see the benefit of this cooperation in bringing stability to oil markets, and will join the effort,"

Traders said it was significant that the joint statement by the world's two top oil producers came before the May 25 OPEC meeting.

"Saudi and Russia are clearly working closely together. Saudi seems very determined to push oil prices higher by making this joint statement now," said Oystein Berentsen, managing director for oil trading company Strong Petroleum in Singapore.

Russia is the world's biggest oil producer, while Saudi Arabia is the biggest exporter. Together, they control around 20 million bpd in daily output, equivalent to a fifth of daily global consumption.

Undermining efforts by OPEC and Russia has been the United States, which did not participate in the agreement to cut supplies.

U.S. drillers added nine oil rigs in the week to May 12, bringing the total count up to 712, the most since April 2015, energy services firm Baker Hughes BHI.N said on Friday. RIG-OL-USA-BHI

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