Oil prices climb as worries over fuel demand recede

[MongiIG]

Oil prices climb as worries over fuel demand recede

CommoditiesDec 28, 2021 

By Mohi Narayan and Naveen Thukral

NEW DELHI (Reuters) -Oil prices extended gains on Tuesday with prices trading near the previous day's one-month high on hopes that the Omicron coronavirus variant will have a limited impact on fuel demand.

Brent crude rose 7 cents, or 0.1%, to $78.67 a barrel, by 0728 GMT. U.S. West Texas Intermediate (WTI) crude rose 17 cents, or 0.2%, to $75.74 a barrel, gaining for a fifth straight session.

"Worries regarding Omicron are easing across the globe, resulting in some optimism over demand ... Prices are expected to trade with positive bias," said Abhishek Chauhan, head of commodities at Swastika Investmart Ltd.

England will not get any new COVID-19 restrictions before the end of 2021, British health minister Sajid Javid said on Monday, as the government awaits more evidence on whether the health service can cope with high infection rates.

However, the upside to prices remained limited after more than 1,300 flights were cancelled by U.S. airlines on Sunday as COVID-19 reduced the number of available crews while several cruise ships had to cancel stops.

China's local symptomatic coronavirus cases rose for a fourth consecutive day on Monday, with Xian reporting more infections in a flare-up that has put the city's 13 million residents under lockdown.

Oil prices have risen around 50% this year, supported by recovering demand and supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+.

"Volumes are thin because of holidays, and markets have already digested Omicron concerns. So, the focus is on the January 4 meeting of OPEC+," Ajay Kedia, director at Kedia Commodities said.

Investors are awaiting an OPEC+ meeting on Jan. 4, at which the alliance will decide whether to go ahead with a planned 400,000 barrels-per-day production increase in February.

At its last meeting, OPEC+ stuck to its plans to boost output for January despite Omicron.

 

Money managers raised their net long U.S. crude futures and options positions in the week to Dec. 21, the U.S. Commodity Futures Trading Commission said on Monday.

The speculator group raised its combined futures and options position in New York and London by 4,634 contracts to 259,093 during the period.

[MongiIG]

Crude Oil Jumps Up While Equities Aim Higher For Year End. Can WTI Continue To Climb?

 

CRUDE OIL, AUD/USD, ASX 200, NIKKEI 225, CHINA - TALKING POINTS

• Crude oil prices find support in illiquid markets as US Dollar sidelined.
• APAC equities were mixed with the ASX 200 the out-performer.
• Year-end holiday markets might have some surprises. Will it go higher?

WTI crude oil continued to climb today as Mexico announced measures to drastically reduce oil exports from next year.

The initial plan, announced by Pemex CEO Octavio Romero, is to halve exports in 2022 followed by zero exports in 2023. Mexico currently ship most of their the raw product to the US for refining.

The domestic capacity of the Central American state to produce this volume of gasoline and diesel has been questioned by some in the market.

Australia’s ASX 200 index made a solid start back from a 4-day weekend with re-balancing and some window dressing seen as the driver for the rally to a 3-month high.

Japan’s Nikkei 225 index was down over 1% at one stage and Chinese equities were also lower with tech stocks leading the way after a weak session on the Nasdaq in the US.

The Evergrande saga continues to unfold in the background with more bond payments missed this week. There is a 30-day extension for the payment to be made before a default can be declared. Although international ratings agencies have already labelled prior mis-payments as a default.

Combined with surging Omicron case numbers in China and globally, sentiment remained subdued. This has the market looking for some more easing measures from the PBOC at some stage.

Iron ore prices continued to slide today, but the Australian Dollar, like almost all currencies pairs, was little moved in the Asian session. US Dollar volatility has collapsed.

Looking ahead to the US day, there will be wholesale inventories data followed by pending home sales numbers.

 

CRUDE OIL TECHNICAL ANALYSIS

WTI crude made a new high for the month in a recent session, before stalling at the 55-day simple moving average (SMA).

This recent high of 76.92 and the 55-day SMA might offer further resistance. Further up, the previous highs of 79.33 and 81.81 may offer resistance.

On the downside, support could be provided at the previous lows and pivot points of 74.96, 74.76, 73.34 and 66.12. The 200-day SMA currently at 70.63 is also a potential support level.

Chart created in TradingView

 

Written by Daniel McCarthy, Strategist for DailyFX.com. 29th December 2021

[MongiIG]

Oil edges higher as U.S. crude inventories decline

CommoditiesDec 29, 2021 

By Mohi Narayan and Naveen Thukral

SINGAPORE (Reuters) - Oil prices edged higher on Wednesday after rallying overnight as industry data showed a decline in U.S. inventories, boosting demand sentiment.

Brent crude rose 16 cents, or 0.2%, at $79.10 a barrel by 0441 GMT. U.S. West Texas Intermediate (WTI) crude climbed 5 cents, or 0.07%, to $76.03 a barrel.

"Some long-covering is evident in Asia today in an otherwise nondescript session," said OANDA analyst Jeffrey Halley in a note.

Both contracts are trading near their highest levels in a month, aided by the strength in global equities.

Asset classes from oil to equities have clawed back losses from late November, when the Omicron variant of COVID-19 sent investors scurrying for safety.

American Petroleum Institute data showed U.S. crude stocks fell by 3.1 million barrels in the week ended Dec. 24, market sources said late on Tuesday, in line with expectations of nine analysts polled by Reuters.

Gasoline inventories registered a lower-than-expected decline of 319,000 barrels, while distillate stocks dropped by 716,000 barrels compared with hopes of a 200,000 barrels drop.

Weekly data from the U.S. Energy Information Administration is due later on Wednesday.

Oil prices have been underpinned by three oil producers declaring forces majeures this month on part of their oil production because of maintenance issues and oilfield shutdowns.

Russia is unlikely to hit its May target of pre-pandemic oil output levels due to a lack of spare production capacity but could do so later in the year, analysts and company sources said on Tuesday.

Deputy Prime Minister Alexander Novak, in charge of Moscow's ties with the OPEC+ group of oil producers, has said output by May is expected to hit pre-pandemic levels, or about 11.33 million barrels per day (bpd) of oil and gas condensate, as seen in April 2020.

 

Investors are awaiting an OPEC+ meeting on Jan. 4, at which the alliance will decide whether to go ahead with a planned production increase of 400,000 barrels per day in February.

At its last meeting, OPEC+ stuck to its plans to boost output for January despite Omicron.