CRUDE OIL-PRICE FORECAST

Goldman Sachs analysts, in their latest research note, downgraded the estimations for oil prices for this year, citing a potential rise in shale gas production, new projects and OPEC restrictions, CNBC reports.

Key Points:

An average of $55.39 per barrel seen for Brent from its previous estimate of $56.76 a barrel.

It also lowered its expectations for WTI to $52.92 per barrel from $54.80.

"We believe we are in a lower for longer environment until there is greater evidence shale deliverability is surprising to the downside or OPEC runs out of spare capacity."

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GOLD IS FLAT LINED

Greece issue may have weighed over Treasury yields and AUD/JPY pair, but it hasn’t had any noticeable impact on the classic safe haven asset - Gold. 

The yellow metal trades comatose around $1269/Oz levels. On the contrary, AUD/JPY, which is widely considered as a risk barometer is down 0.50%, while the 10-year treasury yield is down 1.4 basis points. 

What’s behind gold’s poor performance?

The metal’s poor show this Tuesday morning could be due to expectations that Fed would raise rates by 25 basis points in June. Investors could also be waiting on the sidelines to see how the Greek and German bond markets react before pushing the metal higher. 

The metal may find buyers if the German yields drop and the Greek and Periphery yields spike. A strong US personal spending data may play a spoilsport. 

Gold Levels

A break above $1270.40 (May 1 high) would expose resistance at $1273.88 (Apr 19 low) and $1278 (Apr 25 high). On the other hand, a breakdown of support at $1265 (May 18 low) could yield a pull back to $1256 (50-DMA) and $1247.81 (May 24 low).

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GOLD PRICES ARE TRADING FLAT LINED

Gold prices are trading flat lined around $1268/Oz levels, the highest level since May 1 as the upward revision of the US Q1 GDP failed to boost the treasury yields.

Breakout Considerations:

The metal was largely restricted to a range of $1245-$1263 levels since May 18 before the prices rose to a high of $1269 levels on Friday.

US Q1 GDP was revised higher to 1.25 from the initial estimate of 0.7%. However, the upbeat GDP was overshadowed by a more forward looking, durable goods orders number, which fell 0.7% in April, following a 2.3% rise in March.

Orders for capital goods, excluding aircraft and military equipment, were flat for the second straight month. The drop in the corporate spending made sure the 10-year treasury yield remained flat lined around 2.24%.

Consequently, the metal jumped to a one-month high of $1269 levels. The US markets are closed today; hence the trading volumes could be low. The hawkish comments from Fed’s Williams earlier today failed to move gold or related markets.

Gold Levels To Watch:

A break above $1270.40 (May 1 high) would expose resistance at $1273.88 (Apr 19 low) and $1278 (Apr 25 high). On the other hand, a breakdown of support at $1265 (May 18 low) could yield a pull back to $1256 (50-DMA) and $1247.81 (May 24 low).

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EXTENSION ON OIL PRODUCTION CUTS AGREED BY OPEC

OPEC and some non-OPEC countries agreed on an extension on production cuts for a further nine months to March 2018 in an attempt to counter strong US shale production and high global inventories or to fight the supply glut, which has been pressuring crude oil prices in the past couple of years.

However, despite that solid step to balance the oil market, the initial market reaction pushed the prices even lower. The barrel of West Texas Intermediate dropped to its weekly low at $48.47 and settled at $48.62, losing 5.3% on the day.

 “But for the market, it was clearly a case of ‘buy the rumour, sell the fact’, with oil prices falling sharply. The market is also likely to have jumped on the fact that no new non-OPEC countries will be joining the pact and there was no plan to continue curbs further into 2018. As with any OPEC agreement, markets appear to be a little sceptical that it will actually be successful.”

Current Crude Oil Price:

Currently, Crude Oil is trading at 48.62, down -0.57%, having posted a daily high at 48.95 and low at 48.21.

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COULD OIL PRICES RISE ABOVE $60/BARREL?

Crude Oil prices trades on the front foot in Asia on expectations the major oil producers will extend the output cut deal.

The question is whether the major producers will extend the deal by 6-months, 9-months or 12-months. The OPEC monitoring committee has proposed nine-month cut extension. a 9-month extension may have been priced-in by the markets. A probability of a 12-month extension is low, although that could push oil prices above $60/barrel.

OPEC needs to change the perception

Whatever OPEC does, it should be enough to change the erroneous perception in the market that the drop in the OPEC and non-OPEC supply (due to an output cut deal) will be fully compensated by US oil producers. Only then, the oil prices could see a sustained break above $60 levels.

A sustained move above $60 could revive reflation trade at a time when the markets are losing confidence in Trump Presidency and China PPI appears to have topped out. That would also make it easy for the Fed to hike rates at a faster pace and also begin the process of balance sheet normalization.

Current Crude Oil Price Status:

Currently, Crude oil is trading at 51.75, up +0.76%, having posted a daily high at 51.93 and low at 51.25.

Our Commodity Recommendation:

MMFS SG COMEX YESTERDAY’S CALL: BUY GOLD 1251.50 TARGETS 1255 STOPLOSS 1246

MMFS SG COMEX CALL UPDATE: OUR TARGET 1255 HAS HIT IN GOLD KINDLY BOOK FULL PROFIT. GIVEN YESTERDAY.

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COMMODITIES MARKET DAILY BRIEFING

Commodity markets were mixed overnight while gold prices eased as the USD firmed amid mounting expectations of a rate hike in June by the Fed, while reports that OPEC will likely announce an extension to its production curbs when it meets later this week. 

Crude Oil:

Oil prices on both sides of the Atlantic trade close to 5-week high after the American Petroleum Institute (API) reported a drop in oil, gasoline and distillate inventories. 

The API said the US oil inventories fell 1.5 million barrels in the week ended May 19, compared to the expectation of 2.3 million draw. The actual figure is less than estimates, however, what boosted oil prices was the accompanying drop in the gasoline, distillates, and oil at the Cushing, Oklahoma facility. Gasoline inventories fell by a sizable 3.15 million barrels.

Oil also remains bid on expectations that OPEC would extend the output cut agreement by 9 months. Report hit the wires yesterday that the Cartel is also considering an extension of 12 months. 

Currently, Crude Oil is trading at 51.52, up +0.10%, having posted a daily high at 51.67 and low at 51.40.

Gold:

Gold eased as the USD bounced off recent lows as expectations about a Fed tightening firmed. Palladium posted a solid rise supported by buoyant expectations of car sales.

Currently, Gold is trading at 1,251.86, up +0.05%, having posted a daily high at 1,253.88 and low at 1,250.34.

A break below $1245.36 (38.2% Fib R of Apr high - May low) could yield a sell-off to $1239.88 (Mar 31 low) and $1233.53 (23.6% Fib R of Apr high - May low). On the other hand, a break above $1253 (50-DMA) would open up upside towards $1264.50 (61.8% Fib R of Apr high - May low) and $1270.94 (Apr 7 high). 

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GOLD CLOCKS 3-DAY RISE

The Manchester explosion and the resulting risk-off pushed gold to a three-day high of $1263.46 levels.

The session high almost coincides with the critical 61.8% fib retracement of the April low and the March high - $1264. 50.

The Greater Manchester Policy is treating the explosion as a terrorist incident until they know otherwise. UK PM May has condemned the blast and said they are working to establish the full details of the incident.

Meanwhile, Trump administration has proposed major cuts to social spending program and massive tax cuts that will boost the economic growth. However, the plan is likely to be rejected by Congress. Hence, the proposal has not had any impact on the yellow metal. Furthermore, the CME FedWatch’s June rate hike probability stands unchanged at 78.5%.

The metal may remain well bid and could jump above $1264.50 (61.8% Fib R) if the European stock markets react negatively to Manchester incident.

Gold Levels To Watch

The metal was last seen trading around $1262/Oz. A break above $1264.50 (61.8% Fib R of Apr low - May high) would open doors for $1274.07 (Apr 19 low) and $1278.11 (78.6% Fib R of Apr low - May high). On the downside, break below $1259.50 (session low) could yield a pull back to $1252.53 (50-DMA) and $1243.65 (100-DMA).

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COMMODITY MARKETS RALLY WITH US POLITICAL TURMOIL REIGNITE

Commodity markets rallied across the board because the political turmoil inside the US reignited, sparking a weaker USD, which helped in growing investor appetite in commodities.

KEY COMMODITY MARKET CONSIDERATIONS

Crude Oil:

Crude oil rates persisted to trend higher as the market turns into an increasingly confident that OPEC members will commit to a rollover in the production cut agreement. Azerbaijan joined the refrain of requires an extension; but it favors continuing to the cease of 2017 (instead of Q1 2018). Charges have been also supported with the aid of the broad weak point in the USD. Sentiment was also buoyed via signs of strong demand.

Qatari oil minister Mohammad al-Sada joined a growing number of major oil producers calling for an extension to the OPEC and non-OPEC output cut deal to the end of March 2018, Platts reports.

According to him, after nearly three years of buildup in oil stocks, the process of rebalancing was "finally gaining momentum"

"We are optimistic that the extension of the agreement to the second half of this year will improve market stability, due to the higher expected demand in Q3 and Q4. This is further supported by the fact that the world economic situation is progressively improving" 

"We also see merits of extending the agreement further to the first quarter of 2018, when demand is seasonally lower"

Current Crude Oil Status:

Currently, Crude Oil is trading at 50.73, up + 0.79%, having posted a daily high at 50.89 and low at 50.58.

Gold:

Gold continues to be supported by US political turmoil, with prices threatening to break through USD1260/oz.

US long-term inflation expectations as represented by the 10-year breakeven inflation rate are a big driver of gold prices. The metal being a hedge for inflation usually tracks inflation expectations higher/lower.

The 10-year breakeven inflation rate; the yield difference between 10-year Treasury Inflation Protected Securities (TIPS) and regular 10-year Treasury notes; dropped to 1.78% last week; the lowest level since November 10.

However, gold remained well bid on rising political tensions in the US. Moreover, the metal has rallied from $1222 (May 10 low) to $1264 (last week’s high) mainly due to the turmoil in Washington.

It also means that once the political uncertainty dissipates, the risk premium would evaporate and the metal would fall back in line with the weakening inflation expectations.

Current Gold Status:

Currently, Gold is trading at 1,253.16, down -0.22%, having posted a daily high at 1,257.79 and low at 1,251.85.

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IMPLICATIONS OF GOLD WITH WEAK REFLATION

As a reminder, reflation started to attract the attention of investors at the end of 2016 and was based on two pillars:

• Trump’s rally, i.e. rising expectations about the fiscal stimulus provided by the new administration, and
• Accelerating global inflation and economic growth. As a result, interest rates surged, while the price of gold plunged.

The problem is that both drivers of reflation trade have weakened recently. The failure of Trump to repeal and replace Obamacare undermined markets’ confidence in the quick and smooth implementation of the new administration’s pro-growth agenda. Some argue that the Trump care’s failure is actually a good thing because now the administration will quickly shift to the subject of tax reform. However, such a line of argument is totally wrong as it overlooks significant divisions among Republicans and the fact that healthcare reform was supposed to reduce government expenditures, enabling or at least facilitating the tax cuts.

Of course, the reflation trade is something bigger than Trump’s rally, as the uptick in economic activity started significantly before the U.S. presidential election.

GOLD ANALYSIS

The price of gold (left axis, yellow line, London P.M. Fix), the U.S. nominal interest rates (green line, right axis, as the 10-year nominal treasury yield, in %) and the real interest rates (red line, right axis, as 10-year inflation-indexed treasury yield, in %) from January 2016 to April 2017.

Given the negative correlation between the real interest rates and the gold prices, the recent pullback strengthens the bullish outlook for the price of gold. Moreover, the bond market is more liquid than the stock market, so treasuries are often ahead of equities. It implies that we may see some spring corrections on Wall Street, which should be positive for the yellow metal.

Let’s check other key gold price drivers, which are less bullish. As one can see in the chart below, credit spreads are very low. It indicates high economic confidence, which is bearish for gold. There was a pullback in the U.S. dollar in 2017, but greenback remains in the upward long-term trend – partially because the divergence in monetary policies between the Fed and other major central banks has been widening – which is also negative for the price of gold

Therefore, gold drivers send mixed signals. The U.S. dollar and credit spreads remain bearish, while the real interest rates have turned to be bullish recently, as the Trump rally has definitely softened. To be clear: it’s too early to herald the end of reflation, as the improving manufacturing sector in China should be enough to support the reflation trade in the medium term. There will be ups and downs, but the trend should be higher. What we are saying is that the macroeconomic outlook for gold has recently improved on the margin, as the reflation trade lost Trump’s leg.

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GOLD COULD BREAK THROUGH USD1300/OZ THIS YEAR

Gold this Friday, noting that the yellow metal is likely to surpass $ 1300 mark, even without ‘safe-haven’ buying.

Key Considerations:

“Safe haven buying has provided strong support to gold prices over the past six months. However rising geopolitical risks in the US and elsewhere are likely to propel prices even higher, despite the spectre of a rate hike in the US next month. We see gold holding above USD1250/oz in the short term, and an increasingly possibility of it breaking through USD1300/oz this year if the political situation in the US worsens.”

“Even without the support of safe haven buying, we still see an environment conducive to higher gold prices. Much has been debated about the impact of rising US interest rates on gold. However, we don't see this as a hindrance over the next 12 months. In fact, over the past seven rate hikes cycles (going back to the 1970s), gold has pushed higher in all but one case. Moreover, gold has outperformed in the cycles where interest rates were increasing relatively slowly.”

“We are also seeing signs of an improvement in the physical market. While coming from a low base, physical demand in India and China have rebounded sharply in recent months. The issues around demonetization in India appear to be abating, while a sharp pickup in gold imports into China suggests previous constraints have also eased.”

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CRUDE OIL ON THE BULLISH TREND

Oil prices on both sides of the Atlantic remain well bid in Asia after the US EIA reported what was the biggest weekly draw in inventories this year.

At the time of writing, WTI oil traded 16 cents higher around $47.50/barrel. Brent oil was up 14 cents at $50.34/barrel.

Wednesday’s gain in oil benchmarks has been the biggest since December 1. The EIA report showed supplies dropped by 5.2 million barrels for the week ended May 5, which was way higher than the market expectation.

More importantly, the gasoline stocks declined 200,000 barrels. However, US crude production edged up by 21,000 barrels to 9.314 million barrels a day, EIA data showed.

Saudi cuts exports to Asia

Prices were also buoyed by murmurs that Saudi Arabia is set to cut exports into Asia next month by 7 million barrels.

Meanwhile, Libya reported yesterday that its output has exceeded 800,000 bpd for the first time since 2014, and could average up to 1.2 million bpd for the rest of this year. However, the markets have turned a blind eye towards bearish news out of Libya.

OPEC monthly report

Prices may rally further if the cartel sees a pick up in the demand in the second half of this year. Moreover, a combination of a pickup in demand and an extension of the global output cut deal could tighten the oil markets. 

Current Crude Oil Price:

Currently, Crude Oil is trading at 47.58, up +0.53%, having posted a daily high at 47.62 and low at 47.34.

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COMMODITY MARKET UPDATES OF THE DAY

Talking Points Of Commodity Market:

• Commodities’ prices are likely to get affected by Fed rate hikes and Chinese demand growth over the coming year.
• Commodities to perform well over coming year as Fed hikes rates, at full employment, inflation moving toward its 2% target
• Growth in Chinese demand for industrial metals likely to be muted

GOLD

Gold’s nascent rally petered out overnight, and gold fell to open in Asian trading around 1227.50. Yesterday’s post Macron victory commodity and risk rally ran into a brick wall in European trading as traders booked profits across most asset classes. A resurgent dollar saw the CBOE Volatility Index (VIX) fall to 9.77%, its lowest since 1993, suggesting the market thinks the world is a safer place than at any time in the last 25 years.

Whether you consider this a  gross mispricing of risk or not, the fall of the VIX further hollows out the safe haven bid that has underpinned gold for most of 2017. Should volatility remain becalmed, gold may find itself on the losing end of a deeper correction to the downside.

Gold this morning has initial resistance at yesterday’s high of 1236.50, followed by 1241.60. It is hovering rather nervously above the 100-day moving average at 1223.00 and then 1221.50, yesterday’s low. A close below these levels signalling the next possible down leg could be near.

Current Gold Price:

Currently, Gold is trading at 1,227.39, up +0.09%, having posted a daily high at 1,228.67 and low at 1,224.14.

CRUDE OIL:

Oil continued its rebound overnight but could not hold onto the gains with both Brent and WTI spot finishing roughly unchanged from the previous day. Soothing words from Saudi Arabia about extending the production cut deal, possibly into 2018 supported prices for most of the day until a resurgent U.S. Dollar took the heat out of the rally.

Oil will continue to be headline driven as we head into tomorrow’s crude inventory figures. However, one suspects that OPEC’s comments to talk up crude are already generating diminishing returns with both contracts still trading at the bottom end of their long term ranges

Brent spot trades at 49.10 this morning in Asia with resistance at 50.00 and support near the overnight low around 48.15.

WTI spot trades 46.35 with resistance at 47.00 and support initially at 45.50. A break of the latter may see newly minted longs at these levels heading for the exit door.

Current Crude Oil Price:

Currently, Crude Oil is trading at 46.44, up +0.02%, having posted a daily high at 46.66 and low at 46.39.

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CRUDE OIL MARKETS MOVING INTO REBALANCING

Saudi Arabia’s energy minister crossed the wires now, via Reuters, commenting on oil market fundamentals.

KEY POINTS OF THE DAY:

• Intends to play bigger role to meet Asia's growing energy demand
• Saudi-Pertamina refinery JV to enter feed stage in second half this year
• Saudi continues to explore expanding opportunities, with India being a prime target
• Alternative energy starting from small base, to see slow growth due to obstacles such as subsidies
• Not concerned oil demand will peak anytime soon
• Oil markets continue to improve from last year's low
• Markets recently impacted by slow demand season, ref maintenance, growth in non-OPEC supply
• Worst clearly behind us, market moving into rebalancing
• Expects US inventories to reduce on healthy US demand
• Expects China oil demand growth to match last year's

IN DETAIL:

Oil prices rose on Monday on a growing conviction that an Opec-led production cut initially scheduled to end in June would be extended to cover all of 2017, although a relentless increase in US drilling activity is seen capping gains.

The rise came after steep falls last week on the back of ongoing high supplies from countries that aren't participating in the cuts, including the United States where output is soaring.

Traders said the victory of Emmanuel Macron in the French presidential elections against far-right Marine Le Pen also supported oil prices as it raised hopes of a more stable European economy.

Brent crude futures, the international benchmark for oil prices, were at US$49.85 per barrel at 0020 GMT on Monday, up 75 cents, or 1.5 per cent, from their last close.

WTI Crude oil futures were trading at US$46.87 per barrel, up 65 cents, or 1.4 per cent from the last close.

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GOLD AND CRUDE OIL FORECAST

Commodity Market Talking Points:

• Gold rates keep on falling in FOMC meeting aftermath
• Crude oil rates fall to six-week low as selloff heats up 

Gold:

Gold charges retreated to a seven-week low as markets endured to reckon with the final results of the FOMC policy announcement. The spotlight now turns to April’s US employment report. This is predicted to show payrolls growth picked up last month after hitting a ten-month low in March.

The Fed has disregarded the first-quarter downturn in US development as “transitory”, signaling that it’s appetite for price hikes is undiminished. Because of this something shy of a dramatic disappointment is unlikely to offer the gold a lot of a lasting lifeline.

Gold Technical Level:

A break above $1229.51 (38.2% fib) would open up upside towards $1241.13 (Mar 24 low) and $1247.31 (Apr 10 low). On the lower side, breach of support at $1225.57 (previous day’s low) would expose $1216.80 (Feb 15 low) and $1209.14 (50% fib).

Crude Oil:

Crude oil prices maintain to sink – hitting a six-month low in Asian trade – after suffering the largest day by day decline from early March. The drop inside the benchmark WTI futures contract was observed by way of the highest extent in months.

Traders self belief in the capability of an OPEC production reduce scheme to offset swelling swing delivery has been eroding since mid-April. Liquidation extended after EIA reported that, amongst different things, US output rose for an 11th consecutive week. That’s the longest streak of returned-to-returned gains in over four years.

Crude Oil Technical Level:

A break above $ 45 (round number) could yield a test of $ 45.63 (daily top) beyond which $ 46.19 (daily pivot) could be tested. While a breach of $ 43.50 (psychological levels) would expose $ 43.03 (early Nov lows), below which downside opens up for a test of $ 42.20 (mid-Nov lows).

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CRUDE OIL ANALYSIS & PREDICTION

A new leg down on crude oil in the last 24 hours suggests that entire cycle from April highs is a bearish structure and it indicates on greater weakness ahead, but after a three wave bounce. Currently 5th wave of A is buying and selling around the potential support levels of 47.00.

Crude Oil may reach $70-80 range in 2019 & 2020

Nizar Al-Adsani, head of Kuwait’s national oil organisation Kuwait Petroleum Corporation (KPC) posts optimistic feedback on oil market basics, noting that oil demand may be ‘enormous’ as international investments have been slashed, within the wake of the oil rate crash.

Al-Adsani expects ‘enormous demand’ for crude oil in 2019 and 2020, with oil costs probable within the US$70-80 range per barrel.

He adds, “it’s a given” that we will not see oil at US$100 per barrel anymore, and sees the spot of rates inside the US$50-60 range for all – manufacturers, purchasers, worldwide oil agencies and shale drillers.

Current Crude Oil Status:

Currently, Crude Oil is trading at 47.72, down -0.21%, having posted a daily high at 47.75 and low at 47.59.

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SAUDI ARABIA’S ECONOMY SUCCEEDING IN PROTECTING KINGDOM AGAINST LOW CRUDE OIL PRICES

The prince overseeing Saudi Arabia's economy said his radical reforms were succeeding in protecting the kingdom against low oil prices, and he promised massive investments in coming years to help diversify the economy beyond oil.

"Although our prices dipped to as low as US$27 for more than one year...the government managed to shield economic indicators from the negative impact," Deputy Crown Prince Mohammed bin Salman said in a rare nationally televised interview on Tuesday. "Gross domestic product is still growing - not at global rates, true, but it is not going into deflation."

He said more than half of the tens of billions of dollars that Riyadh expects to raise by selling shares in national oil giant Saudi Aramco would be reinvested domestically by the kingdom's top sovereign wealth fund, the Public Investment Fund (PIF), to create jobs and earn revenue.

In the three years after the share sale, the PIF will spend over 500 billion riyals (S$185.3 billion), with between 50 and 70 per cent going to develop promising non-oil sectors such as mining and logistics within Saudi Arabia, he added.

Prince Mohammed, 31, first described his reform plans to the public in a nationally televised appearance almost exactly a year ago.

Recent Investment Outlook:

In recent months the outlook has improved. The deficit has started to shrink and Riyadh has bought itself time to reduce its reliance on oil by establishing a programme of overseas bond issues, reducing the need to draw down its financial reserves.

Other top Saudi officials trumpeted those achievements in presentations to hundreds of foreign bankers and investors at a Riyadh investment conference organised by Euromoney magazine on Tuesday.

Finance minister Mohammed al-Jadaan said the government was on track to cut its deficit to about US$53 billion this year, and that the government was so far in 2017 paying over 90 per cent of its bills to the private sector within 30 days of the due date.

Delayed payments by the government were a big drag on the economy last year, and in December authorities promised they would in future make all payments within a less stringent target of 60 days.

Problems:

Big uncertainties still overshadow Saudi Arabia's effort to restructure its economy. One is how much money the government can raise through the sale of the Aramco shares. It has predicted the sale will value the company at US$2 trillion, but some private analysts expect a significantly smaller figure.

Prince Mohammed indicated on Tuesday, however, that the Aramco sale would go ahead along the lines he described a year ago, saying a stake close to 5 per cent would be offered in 2018.

He also said authorities would announce a programme to address the kingdom's shortage of private housing in the third quarter of this year, aiming to arrange the construction of over a million housing units through soft loans or the Saudi Real Estate Development Fund. He did not give a time frame.

Much of the Prince Mohammed's economic plan envisions transferring responsibility for development projects and public services to the private sector from the government.

For example, Prince Mohammed said that while the government was committed to providing medical treatment to its citizens, it would not necessarily manage hospitals. Officials have begun preparing plans to sell off some hospitals, perhaps through private equity deals.

The government's austerity policies have brought growth of the non-oil part of the economy near zero. In an effort to support growth, the government reversed a highly unpopular austerity step last month, restoring allowances to public sector workers after cutting them last September to save money.

Prince Mohammed said the relaxation of austerity was due to improved oil and non-oil revenues. But he added that the government was prepared to restore austerity steps if state finances passed through another crisis.

Current Crude Oil Status:

Currently, Crude Oil is trading at 47.94, up + 0.59%, having posted a daily high at 48.17 and low at 47.91.

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CRUDE OIL CONTINUES TO STAY BELOW TO $49

Crude oil expenses continue to stay underneath selling stress on the first buying and selling of the week, pushing the barrel of West Texas Intermediate to a new session low at $48.60. Following the preliminary drop, the barrel of WTI turned into ability to regain some of the losses and is now trading at $48.75, down 1.15% at the day.

President Trump signed an executive order on Friday that would permit the expansion of oil drilling interest in the US to waters near to California and other coastal regions. The growing crude oil production has been the principle motive why the OPEC/non-OPEC output reduce deal hasn't had the intended impact on the rates and this trendy order would even in addition upload to the overall amount of output from the U.S. Moreover, earlier today, a record through Reuters suggested that the Saudi Aramco is planning to release an oil terminal the Red Sea, which would increase the total loading and export capacity to 15 million bpd.

Saudi Aramco to launch oil terminal on the Red Sea next year

State oil giant Saudi Aramco plans to launch its overhauled Muajjiz oil terminal on the Red Sea next year, lifting its total loading and export capacity to as much as 15 million barrels per day, Saudi officials said.

Located on the Red Sea, Muajjiz had been used as an export terminal for Iraqi crude through the Iraqi Pipeline in Saudi Arabia (IPSA), but it has not carried Iraqi crude since Saddam Hussein invaded Kuwait in 1990.

Bringing Muajjiz terminal online next year would boost the kingdom's total oil handling capacity to 15 million barrels per day (bpd) from 11.5 million bpd currently, Mohammed al-Qahtani, Aramco's senior vice president for upstream, told Reuters in an interview at the company's headquarters in Dhahran.

The move will boost Aramco's IPO-ARMO.SE ability to meet its commitments to customers and maintain its export capability from the kingdom's west coast.

Saudi Arabia has three primary oil export terminals, including the port of Ras Tanura on the Gulf, with an average capacity of around 3.4 million bpd and which handles most of Saudi Arabia's exports, according to the U.S. Energy Information Administration (EIA).

The Ras al-Ju'aymah facility on the Gulf has an average handling capacity of about 3 million bpd and can accommodate the largest oil tankers for crude loadings.

The Yanbu terminal on the Red Sea, from which most of the remaining volumes are exported, has an average handling capacity of 1.3 million bpd.

Current Status Of Crude Oil:

Currently, Crude Oil is trading at 48.75, down -0.18%, having posted a daily high at 48.80 and low at 48.66.

Technical Levels to Watch:

The barrel of WTI could face the first hurdle at $49 (psychological level) ahead of $49.75 (Apr. 28 high) and $50.20 (Apr. 26 high). To the downside, supports align at $48.20 (Apr. 27 low), $47.80 (Mar. 28 low) and $47 (Mar. 22 low/psychological level).

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5 REASONS PRICE OF GOLD MAY RISE IN 2017

The gold market observes a steady charge rise in recent years. Clearly, factors affecting the price of gold involve the basics of aesthetic and precautionary gold demand.

The gold market price has dramatically accelerated during the last decade; the gold price has made this yellow metal an attractive trading asset. The demand for gold has especially increased in the Asian countries such as Malaysia, Singapore, China, Hong-Kong etc.

REASONS CONFIRMING THE RISE IN GOLD PRICE

Higher inflation expectations:

As per the analysis, inflationary guidelines adopted by Singapore and US are in all likelihood to increase speculative flows into ETFs related to gold.

In 2017, gold is mainly pushed by using better fiscal spending among rising rates, which might sooner or later cause inflation higher.

Markets have a tendency to save their capital in gold with a purpose to hedge against inflationary stress.

Ticking up of the stock market:

The stock market has returned excellent yields in the years following the Great Recession, and monetary policy has allowed investors the ability to lever up at relatively cheap rates of interest.

In other words, there seems to be little room for gold in a levered portfolio of income-producing assets at this time.

Fall in the Price Of Dollar:

Gold and dollar each are worldwide. Gold and dollar rate are inversely proportional. whilst Dollar’s rate fall people will not buy gold at that point because they need to pay more dollars to buy gold and when the trading price will become high, traders will be inclined to buy gold at that time due to the fact they can pay fewer dollars.

Rising Crude Oil Prices:

Normally the rates of gold and crude oil are associated. The Higher price of crude oil in commodity trading Malaysia market might translate into higher prices of gold.

Geopolitical unrest:

Geopolitical issues always raise the price of gold. As in 2017, geopolitical tensions over North Korea and French Presidential election show a drastic change in the gold rates and hence increase the demand for gold.

BOTTOM LINE:

Being a gold trader it’s important to know the condition of gold market and price of gold. Rising gold could be both beneficial and leads to loss depend totally on your strategy and decision making. For proper decision, you should analyze the market properly.

To know our latest recommendation or gold tips along with stop loss and target price visit www.mmfsolutions.sg

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