Friday, 30 December 2016

Oil on track for largest annual gain in 7 years ahead of production cut | SapForex24

 U.S. oil prices edged slightly higher in light pre-New Year holiday trade on Friday in an attempt to recover losses caused in the prior session from a surprise build in U.S. crude stockpiles while hopes for 2017's kickoff of the agreement to cut output and a weaker dollar helped support the commodity.
Crude oil for February delivery on the New York Mercantile Exchange gained 22 cents, or around 0.4%, to $53.99 a barrel by 4:14AM ET (8:14GMT), after falling 29 cents, or 0.5%, a day earlier.

Elsewhere, Brent oil for March delivery on the ICE Futures Exchange in London rose 29 cents, or 0.5%, to $57.14 a barrel, after the prior session's loss of 8 cents, or 0.14%.
London-traded Brent futures touched a 17-month high of $57.89 earlier this month, amid optimism over planned output cuts by major global oil producers.

Continued profit-taking in the U.S. dollar on Friday also helped support prices. The Dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.18% at 102.48 by 3:44AM ET (9:44GMT), pulling back from a peak of 103.62 reached on December 20.

A weaker dollar boosts crude as it becomes cheaper for traders purchasing with other currencies.
Oil prices are on track for their biggest annual percentage gain since 2009 on the back of an agreement struck between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries to cut crude production.

OPEC and other producers led by Russia have announced cutbacks of almost 1.8 million barrels per day in oil output starting from January 1, 2017 in an effort to bolster prices and support the market.
Meanwhile, the members of an OPEC and non-OPEC committee formed to monitor the market may meet on January 21-22, according to Kuwaiti oil minister Essam Al-Marzouq, which may give an early indication of compliance with the deal.

Oil prices will gradually rise towards $60 per barrel by the end of 2017, a Reuters’ poll showed on Thursday, with further upside capped by a strong dollar, a likely recovery in U.S. oil output and possible non-compliance by OPEC with agreed cuts.

Investors were also looking ahead to Baker Hughes' rig count data.
The oilfield services provider said last Friday that the number of rigs drilling for oil in the U.S. the previous week increased by 13 to 523, the eighth straight weekly rise and a level not seen in almost a year.

Some analysts have warned that the recent rally in prices could be self-defeating, as it encourages U.S. shale producers to drill more, adding to concerns over a global supply glut.
Elsewhere on Nymex, gasoline futures for February added 0.23% to $1.6793 a gallon, while February heating oil tacked on 0.37%, to $1.7263 a gallon.

Natural gas futures for February delivery slumped 2.0 cents, or 0.53%, to $3.822 per million British thermal units.

Wednesday, 14 December 2016

Forex - Dollar little changed ahead of Fed meeting- SapForex24

The dollar fluctuated between small gains and losses the other major currencies on Wednesday as investors stayed on the sidelines ahead of the outcome of the Federal Reserve’s latest policy meeting later in the day.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 101.05, little changed for the day.
The Fed is widely expected to hike rates for the first time in a year, with investors pricing in a 100% chance of an increase, according to federal funds futures tracked Fed Rate Monitor Tool.

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Investors will be focusing on the details of the central banks latest economic forecasts, the first since the U.S presidential election, for indications on the expected pace of rate hikes going forward.
Higher rates typically boost the dollar by making dollar assets more attractive to yield-seeking investors.

The euro was steady, with EUR/USD at 1.0625.
The dollar edged lower against the yen, with USD/JPY dipping to 115.12, holding below Monday’s highs of 116.12, the highest level since February 8.

The pound edged higher, with GBP/USD rising to 1.2672 ahead of the latest U.K. employment report later in the day.

The commodity linked currencies were also little changed, with AUD/USD at 0.7496 and NZD/USD at 0.7210. USD/CAD was trading at 1.3120.

Thursday, 1 December 2016

Oil prices surge, trading volume records smashed as OPEC and Russia agree output cut-SapForex24

An agreement between oil producer club OPEC and Russia to produce less to drain a global glut sent prices soaring in record trading volumes on Thursday, even as analysts warned other producers will likely top up supply.

The Organization of the Petroleum Exporting Countries (OPEC)agreed on Wednesday its first oil output reduction since 2008 after de-facto leader Saudi Arabia accepted "a big hit" and dropped a demand that arch-rival Iran also slash output.

The deal also included the group's first coordinated action with non-OPEC member Russia in 15 years. On Thursday Azerbaijan said it was also willing to engage in talks on cuts.

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"OPEC has agreed to an historic production cut," analysts at AB Bernstein said. "The cut of 1.2 million barrels per day (bpd) was at the upper end of expectations (0.7-1.2 million bpd). An additional cut of 0.6 million bpd from non-OPEC countries could significantly add to what has been announced by OPEC."

The price for Brent crude futures (LCOc1), the international benchmark for oil prices, jumped as much as 13 percent from below $50 on Wednesday and was at $52.10 per barrel at 0806 GMT, although traders pointed out that part of the jump was down to contract roll-over from January to February for Brent's front-month futures.

U.S. West Texas Intermediate (WTI) crude futures rose back above $50 briefly before easing to $49.63 a barrel at 0806 GMT, though still up 20 cents from its last settlement.
"OPEC has delivered an agreement," said Jason Gammel of U.S. investment bank Jefferies. "Bulls got as much as could be hoped for...For the time being, oil prices have received a huge support."

The development also triggered frenzied trading, with Brent futures trading volumes for February and March, when the supply cut will start to be visible in the market, hitting record volumes.

The second front-month Brent crude futures contract, currently March 2017, traded a record 783,000 lots of 1,000 barrels each on Wednesday, worth around $39 billion and easily beating a previous record of just over 600,000 reached in September. That's more than eight times actual daily global crude oil consumption.

April Brent traded 288,000 lots of 1,000 barrels each, compared with a previous record of 228,7000 lots done in July 2014.

The records also meant that Brent volumes far exceeded trades in U.S. West Texas Intermediate (WTI) Crude futures, which tend to be higher than those for Brent, but which registered only 368,000 and 214,800 lots for March and April, respectively.

Despite the agreed deal, some doubts over the cut remained. "This is an agreement to cap production levels, not export levels," British bank Barclays (LON:BARC) said. "The outcome is consistent with... what OPEC production levels were expected to be in 2017 irrespective of the deal reached."
Meanwhile U.S. bank Morgan Stanley (NYSE:MS) said that "skepticism remains on individual countries' follow-through (on the cut), which is keeping prices below year-to-date highs (of $53.73 per barrel in October) for now."

Despite the jump in prices, they are still only at September-October levels - when plans for a cut were first announced - and prices are at less than half their mid-2014 levels, when the global glut started.
Goldman Sachs (NYSE:GS) said in a note following the agreement that it expected oil prices to average just $55 per barrel in the first half of next year.

OPEC produces a third of global oil, or around 33.6 million bpd, and the deal aims to reduce output by 1.2 million bpd from January 2017, similar to January 2016 levels, when prices fell to over 10-year lows amid ballooning oversupply.

Analysts said that the cuts would leave the field open for other producers, especially U.S. shale drillers.

"We do not believe that oil prices can sustainably remain above $55 per barrel, with global production responding first and foremost in the U.S.," Goldman Sachs said.
U.S. crude production has risen by over 3 percent this year to 8.7 million bpd, as its drillers have aggressively slashed costs.