IGI Securities Limited – Commodity News

Karachi, June 26, 2018 (PPI-OT): Crude Oil

Technical

WTI Crude Oil markets gapped lower initially yesterday, drifting down towards the $60.25 level before bouncing. However, there is more noise to be found in this market as it is still trying to figure out what the production situation will be like coming out of OPEC and other nations. Ultimately, the buyers probably come back, because confusion means that it probably won’t have as much of an increase in output as people had hoped. The 50 EMA on the hourly chart is sloping higher, which is use as a short-term indicator quite often. Because of this, buying dips show signs of support, especially near the $60 handle. Brent markets do look a bit softer than the WTI grade, and at this point it is probably in a range. The $73 level underneath should be rather supportive, just as the $76 level above should be rather resistive. If it break down below the $72.50 level, then it might could unwind to the $70 level.

Highlights

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

U.S crude is its highest premium above second- month futures since 2014

Despite the OPEC agreement last week, the tight supply is likely to drive oil prices higher during 2018

It estimated a demand drop of 44,000 bpd for every 1 percent drop in global trade

Brent could rise to $90 a barrel by the second quarter of 2019

Fundamentals

Oil edged up today, lifted by a Canadian production outage and uncertainty over Libyan crude exports, though climbing OPEC supplies and the intensifying trade conflict between the United States and other major economies held back prices.

Brent crude futures were at $74.86 per barrel, up 13 cents or 0.2 percent, from their last close. Brent was driven up by uncertainty around oil exports by Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC).

The move increases the risk that Libyan oil output will be shut in as the NOC in Tripoli is the only legal entity with the right to sell oil. U.S West Texas Intermediate crude futures were at $68.38 a barrel, up 30 cents or 0.4 percent.

The spread between the two benchmarks has narrowed in recent days, with analysts attributed at least part of the better performance in WTI prices on a crude production outage in Canada that is expected to tighten the U.S market.

The OPEC meeting ended with the existing deal being left unchanged but the group aiming to reduce over-compliance and to get output back to the originally- intended levels.

Ministers from OPEC and non-OPEC producers met Saturday and said they agreed that countries will strive to adhere to the overall conformity level, voluntarily adjusted to 100% .

Most of the additional output to come under the agreement will be produced in Saudi Arabia and Russia, and that flow will likely go primarily to consumers of Brent crude.

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IGI Securities Limited – Commodity News

Karachi, June 26, 2018 (PPI-OT): Crude Oil

Technical

WTI Crude Oil markets gapped lower initially yesterday, drifting down towards the $60.25 level before bouncing. However, there is more noise to be found in this market as it is still trying to figure out what the production situation will be like coming out of OPEC and other nations. Ultimately, the buyers probably come back, because confusion means that it probably won’t have as much of an increase in output as people had hoped. The 50 EMA on the hourly chart is sloping higher, which is use as a short-term indicator quite often. Because of this, buying dips show signs of support, especially near the $60 handle. Brent markets do look a bit softer than the WTI grade, and at this point it is probably in a range. The $73 level underneath should be rather supportive, just as the $76 level above should be rather resistive. If it break down below the $72.50 level, then it might could unwind to the $70 level.

Highlights

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

U.S crude is its highest premium above second- month futures since 2014

Despite the OPEC agreement last week, the tight supply is likely to drive oil prices higher during 2018

It estimated a demand drop of 44,000 bpd for every 1 percent drop in global trade

Brent could rise to $90 a barrel by the second quarter of 2019

Fundamentals

Oil edged up today, lifted by a Canadian production outage and uncertainty over Libyan crude exports, though climbing OPEC supplies and the intensifying trade conflict between the United States and other major economies held back prices.

Brent crude futures were at $74.86 per barrel, up 13 cents or 0.2 percent, from their last close. Brent was driven up by uncertainty around oil exports by Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC).

The move increases the risk that Libyan oil output will be shut in as the NOC in Tripoli is the only legal entity with the right to sell oil. U.S West Texas Intermediate crude futures were at $68.38 a barrel, up 30 cents or 0.4 percent.

The spread between the two benchmarks has narrowed in recent days, with analysts attributed at least part of the better performance in WTI prices on a crude production outage in Canada that is expected to tighten the U.S market.

The OPEC meeting ended with the existing deal being left unchanged but the group aiming to reduce over-compliance and to get output back to the originally- intended levels.

Ministers from OPEC and non-OPEC producers met Saturday and said they agreed that countries will strive to adhere to the overall conformity level, voluntarily adjusted to 100% .

Most of the additional output to come under the agreement will be produced in Saudi Arabia and Russia, and that flow will likely go primarily to consumers of Brent crude.

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