IGI Securities Limited – Commodity News

Karachi, June 11, 2018 (PPI-OT): Crude Oil

Technical

Crude Oil initially fell during the week, drifting down towards the pseudo-uptrend line and bouncing to form a bit of a hammer. If it can break above the top of the hammer, the market should continue to go higher, perhaps trying to reach towards the $70 level. While it has sold off rather drastically as of late, it looks as if it is going to at the very least bounce, perhaps try to go even higher. The recent shakeout has been rather drastic, but perhaps a bit overdone. Brent markets also fell during the week but turned around form a hammer. The $75 level underneath should offer support, just as the bottom of the hammer from this past week will be. It could rally from here, perhaps reaching towards the $80 level above. Economists think if it break down below the hammer, then the market will go looking towards the uptrend line underneath, perhaps dropping down to the $72 region.

Highlights

Oil prices fell, pulled down by rising Russian production and U.S drilling activity creeping to its highest in more than three years

U.S crude output, already at a record high of 10.8 million barrels per day (bpd), will climb further

Beyond changes in the supply-side, strong demand has been supportive of oil prices

Overseas crude purchases by top importer China remain above 9 million bpd, despite a recent drop from records

Sentiment on oil prices remained mostly negative, as investors continued to fear OPEC

Fundamentals

Oil prices were mixed today, caught between the downward pull of rising Russian production and U.S oil drilling activity at its highest since2015, and upward pressure from strong demand, especially inAsia.

Brent crude futures were at $76.18 per barrel, down 28 cents or 0.4 percent, from their last close. U.S West Texas Intermediate crude futures were down 18 cents or 0.3 percent, at $65.56 a barrel.

Back in oil markets, analysts expect surging U.S output to start offsetting efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to withhold production, which have been in place since early 2017 and have pushed up prices significantly in the first half of this year.

Prices were weighed down by another rise in the number of rigs drilling for new oil production in the United States. The rig count inched up by one to its highest since March, 2015 at 862.

Non-OPEC supply is expected to rise sharply in 2019 led by U.S shale growth, along with Russia, Brazil, Canada and Kazakhstan. It was bearish on the oil price outlook going into the second-half of the year.

Going into next year, oil fundamentals are expected to weaken in 2019 on the back of stronger-than-expected non-OPEC supply, but also the potential release of barrels from OPEC as the joint accord between OPEC and non-OPEC is unlikely to stay in place.

OPEC, together with some non-OPEC producers including Russia started withholding output in 2017 to end a global supply overhang and prop up prices. OPEC and its partners are due to meet on June 22 at the cartel’s headquarters in Vienna, Austria, to discuss policy.

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IGI Securities Limited – Commodity News

Karachi, June 11, 2018 (PPI-OT): Crude Oil

Technical

Crude Oil initially fell during the week, drifting down towards the pseudo-uptrend line and bouncing to form a bit of a hammer. If it can break above the top of the hammer, the market should continue to go higher, perhaps trying to reach towards the $70 level. While it has sold off rather drastically as of late, it looks as if it is going to at the very least bounce, perhaps try to go even higher. The recent shakeout has been rather drastic, but perhaps a bit overdone. Brent markets also fell during the week but turned around form a hammer. The $75 level underneath should offer support, just as the bottom of the hammer from this past week will be. It could rally from here, perhaps reaching towards the $80 level above. Economists think if it break down below the hammer, then the market will go looking towards the uptrend line underneath, perhaps dropping down to the $72 region.

Highlights

Oil prices fell, pulled down by rising Russian production and U.S drilling activity creeping to its highest in more than three years

U.S crude output, already at a record high of 10.8 million barrels per day (bpd), will climb further

Beyond changes in the supply-side, strong demand has been supportive of oil prices

Overseas crude purchases by top importer China remain above 9 million bpd, despite a recent drop from records

Sentiment on oil prices remained mostly negative, as investors continued to fear OPEC

Fundamentals

Oil prices were mixed today, caught between the downward pull of rising Russian production and U.S oil drilling activity at its highest since2015, and upward pressure from strong demand, especially inAsia.

Brent crude futures were at $76.18 per barrel, down 28 cents or 0.4 percent, from their last close. U.S West Texas Intermediate crude futures were down 18 cents or 0.3 percent, at $65.56 a barrel.

Back in oil markets, analysts expect surging U.S output to start offsetting efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to withhold production, which have been in place since early 2017 and have pushed up prices significantly in the first half of this year.

Prices were weighed down by another rise in the number of rigs drilling for new oil production in the United States. The rig count inched up by one to its highest since March, 2015 at 862.

Non-OPEC supply is expected to rise sharply in 2019 led by U.S shale growth, along with Russia, Brazil, Canada and Kazakhstan. It was bearish on the oil price outlook going into the second-half of the year.

Going into next year, oil fundamentals are expected to weaken in 2019 on the back of stronger-than-expected non-OPEC supply, but also the potential release of barrels from OPEC as the joint accord between OPEC and non-OPEC is unlikely to stay in place.

OPEC, together with some non-OPEC producers including Russia started withholding output in 2017 to end a global supply overhang and prop up prices. OPEC and its partners are due to meet on June 22 at the cartel’s headquarters in Vienna, Austria, to discuss policy.

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