Oil Falls To A Fresh 1-Month Low

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Oil prices fell down once again after bouncing back overnight in U.S. trading, falling to a fresh 1-month low following data showed a surprise build in U.S. crude stockpiles and the return of more Nigerian crude to an already oversupplied market.

The oil price has slipped below $50 a barrel despite a pledge by the world’s largest exporters to extend an existing output cut of 1.8 million barrels per day (bpd) into next year in an effort to cut down bulging global inventories.

The U.S. West Texas Intermediate crude July contract was at $45.45 a barrel by 8:2 AM EDT, down 24 cents, or 0.55%, after hitting its lowest since May 5 at $45.34.

Meanwhile, Brent Oil for August delivery on the ICE Futures Exchange in London plummeted 25 cents, or 0.54% to 47.81 a barrel. The global benchmark dropped to as low as $47.65 earlier in session, a level not seen since May 5.

Unexpected surge in U.S. crude stockpiles

Oil prices plunged to their lowest level in about a month on Wednesday after data showed that U.S. crude stockpiles unexpectedly climbed for the first time in nine weeks.

The U.S. Energy Information Administration said in its weekly report that crude oil inventories increased by 3.3 million barrels in the week that ended on June 2, disappointing expectations for a crude-stock decline of 3.4 million barrels.

Gasoline inventories also increased by 3.3 million barrels. For distillate inventories including diesel, the EIA reported a rise of 4.4 million barrels.

Supply Gloom Caps Gains

Addition to concern about supply outstripping demand, Royal Dutch Shell on Wednesday lifted force majeure on exports of Nigeria’s Forcados crude, bringing all the country’s oil grades fully online for the first time in almost one and a half year.

The market has also come under pressure from news of rising output from Libya, which together with Nigeria is exempted from the production cut made by the Organization of the Petroleum Exporting Countries and its 11 partners.

“I’ve been quite bullish for the second half of this year, based on supply and demand balances and I would still not give up on that idea, that rebalancing is going to start in the second half,” said Tamas Varga, an oil strategist.

“But if Nigerian and Libyan production is picking up as well as they are now, then slowly, I am probably going to have to start changing my mind.”

Glut Concerns Weigh

Meanwhile, investors kept weighing the effect of diplomatic tensions between Qatar and other Middle Eastern nations, including Saudi Arabia, on an OPEC-led push to tighten up the market.

With oil production of about 620,000 barrels per day, Qatar’s crude production ranks as one of the smallest among OPEC producers, but tension within the cartel could deteriorate an agreement to hold back production in order to bolster prices.

Last month, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018.

Concerns that the current rebound in U.S. shale production could upset efforts by other major producers to bring balance back to global oil supply and demand remained in focus.

Elsewhere On Nymex

Gasoline futures for July dropped down 0.7% to $1.491 a gallon, while July heating oil subtracted 0.2% to $1.413 a gallon. Natural gas futures for July delivery also dropped down 0.4% to $3.008 per million British thermal units, as traders anticipate the weekly storage data due later in the global day.

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Japan Stocks Increases at Close of Trade; Nikkei 225 Increase 0.23%

After the close on Thursday, Japan stocks increased as gains in the Construction, Paper & Pulp and Services sectors led shares higher.

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After the close on Thursday, Japan stocks increased as gains in the Construction, Paper & Pulp and Services sectors led shares higher.

The Nikkei 225 increased 0.23% at the close in Tokyo.

The poorest performers of the session were DeNA Co Ltd (T:2432), which decline 5.45% or 138.0 points to trade at 2392.0 at the close. The Japan Steel Works, Ltd. (T:5631) dropped 2.44% or 46.0 points to end at 1843.0 and Concordia Financial Group Ltd (T:7186) declined 1.90% or 10.3 points to 531.7.

The top performers of the session on the Nikkei 225 were Toshiba Corp. (T:6502), which increased 6.75% or 13.1 points to trade at 207.2 at the close. Temporarily, Tokai Carbon Co., Ltd.(T:5301) added 4.20% or 20.0 points to end at 496.0 and Nippon Meat Packers, Inc.(T:2282) increased 3.39% or 105.0 points to 3205.0 in late trade.

Decreasing stocks outnumbered progressing ones on the Tokyo Stock Exchange by 1634 to 1383 and 325 ended unaffected.

The Nikkei Volatility, which gauges the implied volatility of Nikkei 225 options, increased  19.63% to 18.65.

Delivery of crude oil for May increased 0.50% or 0.24 to $48.28 a barrel.

Somewhere else in commodities trading, delivery of Brent oil in May increased 0.45% or 0.23 to hit $50.87 a barrel, although the April Gold Futures contract drop 0.21% or 2.65 to trade at $1247.05 a troy ounce.

USD/JPY increased  0.01% to 111.17, while EUR/JPY declined 0.01% to 120.01.

The US Dollar Index Futures increased 0.04% at 99.52.

On Additional News

Taiwan stocks increased after the close on Thursday, as increases in the  Construction, Electricity and Textile sectors led shares higher.  At the close in Taiwan, the Taiwan Weighted increased 0.08%.

The top performers of the session on the Taiwan Weighted were I-Hwa Industrial Co Ltd (TW:1456), which surge 10.00% or 1.15 points to trade at 12.65 at the close. In the meantime,Lung Hwa Eltrs (TW:2424) added 10.00% or 3.00 points to end at 33.00 and Champion(TW:1806) increased 10.00% or 0.79 points to 8.69 in late trade.

Increasing stocks outnumbered dropping ones on the Taiwan Stock Exchange by 426 to 332 and 121 ended unmoved.

The poorest performers of the session were Hiwin (TW:2049), which declines l 7.33% or 15.00 points to trade at 189.50 at the close. Zhen Ding (TW:4958) dropped 5.32% or 4.10 points to end at 73.00 and Falcon Power Co Ltd (TW:1516) declined 5.00% or 1.10 points to 20.90.

Shares in Lung Hwa Eltrs (TW:2424) increased to 52-week peaks; increasing 10.00% or 3.00 to 33.00. Shares in Champion (TW:1806) surge  to 52-week peaks; up 10.00% or 0.79 to 8.69.

USD/TWD declined 0.04% to 30.481, while TWD/CNY increased 0.04% to 0.2261.

The US Dollar Index Futures was unchanged 0.00% at 99.48.

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U.S. Crude Strengthens on Surprise U.S. Stock Draw

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On Wednesday, U.S. oil prices increased more than 2% in early Asian trade, recovering from a three month low after industry statistics indicated a surprise drawdown in U.S. crude stockpiles and Goldman Sachs (NYSE:GS) put a positive turn on OPEC’s compliance with production cuts.

U.S. West Texas Intermediate crude (CLc1) was trading up 70 cents, or 1.5%, at $48.42 a barrel by 0036 GMT, having earlier increased more than $1 to $48.87. The increase came after the deal declined for a 7th session in a row on Tuesday, the longest losing streak since January 2016.

Brent futures increased 60 cents, or 1.2%, at $51.52, after settling down 43 cents at $50.92 on Tuesday, the deepest finish since November.

U.S. crude stocks dropped by  531,000 barrels the previous  week, industry group the American Petroleum Institute stated on Tuesday after settlement.

That compared with analysts’ expectations for an upsurge of 3.7 million barrels. If the draw is complete by government data on Wednesday, it would be the first decline after nine consecutive increases.

The data also indicated, U.S. gasoline and distillate inventories drew more than expected.

On Tuesday, oil plunged after  the Organization of the Petroleum Exporting Countries (OPEC) reported an increase in global crude stocks and a surprise production increased  from its biggest member, Saudi Arabia, additionally pressuring prices that have erased almost all of their gains since OPEC broadcasted production cuts in November.

Secondary sources had said Saudi output declined in February to 9.797 million barrels per day (bpd), however,  Riyadh told OPEC it increased to 10.011 million barrels per day bpd.

In an effort to eliminate market concerns, the Saudi energy ministry stated the “difference between what the market observes as production, and the actual supply levels in any given month, is due to operational factors that are influenced by storage adjustments and other month to month variables.”

Influential U.S. investment bank Goldman Sachs create a positive light on the numbers, stating compliance with output cuts stays high in spite of the increase in stocks. Market rebalancing is still developing and the bank expects demand for oil to finally surpass supply next quarter.

“Our expectations that inventories will draw through 2017 therefore leads us to expect that Brent timespreads will continue to strengthen with the forward curve in backwardation by 3Q17,” Goldman said in its research note.

The Organization of the Petroleum Exporting Countries (OPEC)  monthly report said oil stocks in industrialized nations increased  in January to 278 million barrels above the five-year average, with U.S. shale and other non-OPEC supply gaining.

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