Oil prices continued their march higher in European trade on Wednesday, extending gains into a third session as investors looked ahead to weekly data
Crude oil – Oil prices continued their march higher in European trade on Wednesday, extending gains into a third session as investors looked ahead to weekly data from the U.S. on stockpiles of crude and refined products. After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories fell by a whopping 10.2 million barrels in the week ended July 21. The API report also showed a gain of 1.9 million barrels in gasoline stocks, while distillate stocks fell by 111,000 barrels. There are often sharp divergences between the API estimates and the official figures from EIA. Oil prices scored their biggest one-day rally of 2017 on Tuesday as fresh pledges from Saudi Arabia and Nigeria at the start of the week to respectively pull back on exports and output boosted sentiment. At an Organization of the Petroleum Exporting Countries meeting on Monday, Saudi Arabia announced it would cut August exports to 6.6 million barrels a day, which would be a million less than a year earlier. In addition, Nigeria, which has been exempt from this year’s OPEC-led production-cut deal, pledged to cap output once it reaches a level of 1.8 million barrels a day. The cartel’s latest data put the country’s output at around 1.7 million. In May, OPEC and some non-OPEC producers, such as Russia, extended an agreement to slash 1.8 million barrels per day in supply until March 2018. So far, it has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, as well as a relentless increase in U.S. shale production.
Gold – Gold prices edged lower in European trade on Wednesday, as market players looked ahead to the outcome of the Federal Reserve’s policy meeting for insight on the timing of the next U.S. rate hike and clues on how the central bank plans to pare back its balance sheet. The Fed is not expected to take action on interest rates at the conclusion of its two-day policy meeting at 2:00PM ET (1800GMT), keeping it in a range between 1.0%-1.25%. The central bank will release its post-meeting statement as investors look for any change in language which could point more clearly to the timing of its next rate hike. Market players will also pay close attention to details of when and how the Fed will start reducing its $4.5 trillion balance sheet. The Fed’s comments on inflation will also be in focus. According to Investing.com’s Fed Rate Monitor Tool, conviction for another rate hike before the end of the year has faded, with just 40% of market players expecting another move by December, as the subdued inflation outlook raised doubts over whether policymakers will be able to stick to their planned tightening path. Focus will also be on headlines coming out of Washington, where the Senate is expected to continue working to repeal Obamacare. The investigation into U.S. President Donald Trump campaign’s ties to Russia will continue to get attention.
Lead – In China’s market, scrap lead-acid battery prices dropped in late June and early July following lead price decline, with scrap motive battery price down by 150 yuan per tonne to 9,250 yuan per tonne from 9,400 yuan per tonne seen on June 22. This, coupled with strict environmental protection inspections, puts scrap battery recycling industry under shuffling. SMM survey finds that all small secondary lead smelters shut down in response to environmental checks, and output at large secondary lead smelter is also restricted by high temperature. Those smelters thus push down purchase price for scrap lead-acid battery, shrinking profits at scrap battery recyclers. Moreover, traders are active in selling with pessimistic outlook. Hence, scrap battery price failed tracing lead price up this week.
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