IGI Securities Limited – Commodity News

Karachi, June 25, 2018 (PPI-OT): Crude Oil

Technical

Based on last week’s price action and the close at $68.58, the direction of the August WTI crude oil futures contract this week is likely to be determined by investors reaction to the 50% level at $68.05 and the 61.8% level at $69.15. The first move to the upside after a steep break is usually fueled by short-covering. The next move is usually a 50% pullback of the first leg up. If this market is headed higher, then the pullback should attract new buyers. Investors are going to chase this market higher. August WTI crude oil futures spiked as much as 5 percent on Friday after OPEC and other major oil exporters agreed to a modest increase in output to compensate for losses in production in Venezuela and Iran at a time of rising global demand. In announcing the deal, OPEC said that it would go back to 100% compliance with previously agreed output cuts but gave no concrete figures.

Highlights

Oil prices fell today following the Organisation of Oil Exporting countries (OPEC)’s decision to raise output on Friday

Global oil markets would likely remain relatively tight this year

The most recent price rally followed an OPEC decision to restrict supply in an effort to drain global inventories

Hedge funds and other money managers cut their bullish wagers on U.S crude futures

U.S drillers cut the number of rigs drilling for oil by one to 862, the first cut in 12 weeks

Fundamentals

Oil prices fell today as investors factored in an expected 1 million barrels per day (bpd) output increase in the wake of an Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna last week.

Brent crude futures were at $74.25 per barrel, down 1.7 percent from their last close. U.S West Texas Intermediate (WTI) crude futures were at $68.42 a barrel, down 0.2 percent, supported more than Brent by a slight drop in U.S drilling activity and a Canadian supply outage.

Prices initially jumped after an OPEC deal to increase output was announced late last week as it was not seen boosting supply by as much as some had expected.

The OPEC agreed to a nominal increase in production of 1 million barrels a day. While OPEC members will add around 700,000 barrels a day, non-OPEC oil suppliers led by Russia would add the rest.

For about three weeks ahead of the OPEC meeting, prices had retreated from 3-1/2-year highs on fears that larger production increases could lead to oversupply.

In post-settlement trading, both U.S and Brent crude continued to strengthen. Brent rose $2.56 or 3.5 percent to $75.61, and U. crude traded $3.70, or 5.65 percent to $69.23 a barrel .

U.S crude’s discount to Brent narrowed by about 15 percent to $6.36 in the session, making it the smallest since May 11. OPEC and non-OPEC partners including Russia have since 2017 cut output by 1.8 million bpd to tighten the market and prop up prices.

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IGI Securities Limited – Commodity News

Karachi, June 25, 2018 (PPI-OT): Crude Oil

Technical

Based on last week’s price action and the close at $68.58, the direction of the August WTI crude oil futures contract this week is likely to be determined by investors reaction to the 50% level at $68.05 and the 61.8% level at $69.15. The first move to the upside after a steep break is usually fueled by short-covering. The next move is usually a 50% pullback of the first leg up. If this market is headed higher, then the pullback should attract new buyers. Investors are going to chase this market higher. August WTI crude oil futures spiked as much as 5 percent on Friday after OPEC and other major oil exporters agreed to a modest increase in output to compensate for losses in production in Venezuela and Iran at a time of rising global demand. In announcing the deal, OPEC said that it would go back to 100% compliance with previously agreed output cuts but gave no concrete figures.

Highlights

Oil prices fell today following the Organisation of Oil Exporting countries (OPEC)’s decision to raise output on Friday

Global oil markets would likely remain relatively tight this year

The most recent price rally followed an OPEC decision to restrict supply in an effort to drain global inventories

Hedge funds and other money managers cut their bullish wagers on U.S crude futures

U.S drillers cut the number of rigs drilling for oil by one to 862, the first cut in 12 weeks

Fundamentals

Oil prices fell today as investors factored in an expected 1 million barrels per day (bpd) output increase in the wake of an Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna last week.

Brent crude futures were at $74.25 per barrel, down 1.7 percent from their last close. U.S West Texas Intermediate (WTI) crude futures were at $68.42 a barrel, down 0.2 percent, supported more than Brent by a slight drop in U.S drilling activity and a Canadian supply outage.

Prices initially jumped after an OPEC deal to increase output was announced late last week as it was not seen boosting supply by as much as some had expected.

The OPEC agreed to a nominal increase in production of 1 million barrels a day. While OPEC members will add around 700,000 barrels a day, non-OPEC oil suppliers led by Russia would add the rest.

For about three weeks ahead of the OPEC meeting, prices had retreated from 3-1/2-year highs on fears that larger production increases could lead to oversupply.

In post-settlement trading, both U.S and Brent crude continued to strengthen. Brent rose $2.56 or 3.5 percent to $75.61, and U. crude traded $3.70, or 5.65 percent to $69.23 a barrel .

U.S crude’s discount to Brent narrowed by about 15 percent to $6.36 in the session, making it the smallest since May 11. OPEC and non-OPEC partners including Russia have since 2017 cut output by 1.8 million bpd to tighten the market and prop up prices.

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