Oil torn between broader market selloff, signs of tightening supply – Oil prices were largely steady on Friday,
Oil torn between broader market selloff, signs of tightening supply – Oil prices were largely steady on Friday, torn between a broad-based selloff across markets and signs that crude supplies are gradually tightening. Oil prices have been weighed down amid a selloff across markets, including U.S. and Asian stocks, where investors voted with their feet amid growing scepticism that U.S. President Donald Trump, embroiled in controversy, would achieve his economic agenda. The overall softness in financial markets added to the perception that oil supply remains higher than demand despite producer efforts to reduce output. The Organization of the Petroleum Exporting Countries (OPEC), together with non-OPEC producers like Russia, has pledged to restrict output by 1.8 million barrels per day (bpd) between January this year and March 2018. “Sentiment in oil markets remains weak,” U.S. investment bank Jefferies said. Oil is declining even amid signs that crude markets are tightening. On the demand side, Asia in particular could see some stronger crude orders going into the second-half of the year. Driven by the start-up of a refinery in Yunnan province in southern China and the completed expansion of a fuel processing facility at Huizhou, Chinese crude oil imports are expected to pick up.
Gold prices move higher in risk-off trade – Gold prices moved higher on Friday, hovering close to a recent two-month peak, after a terrorist attack in Spain boosted demand for safe-haven assets. The precious metal found support after a van rammed into pedestrians in a crowded tourist area of Barcelona on Thursday evening, killing at least 13 people and injuring 100 others. The Islamic State claimed responsibility for the incident. Spanish police said that two men had been arrested so far. Gold prices were also boosted by a weaker U.S. dollar, after eight chief executives quit two business advisory councils on Wednesday in protest over U.S. President Donald Trump’s controversial remarks on weekend violence in Virginia. The U.S. President reacted to the departures by disbanding the councils – the American Manufacturing Council and the Strategic and Policy Forum. White House Economic Adviser Gary Cohn denied rumors of his possible departure late Thursday. However, growing opposition to Trump’s positions, including from within his own party, have fueled concerns over the administration’s ability to implement its political agenda. The dollar also remained under pressure after the minutes of the Fed’s July policy meeting released on Wednesday showed that members of the central bank remain divided over the need to raise interest rates further this year, citing low inflation.
NATURAL GAS – Natural gas markets went sideways for most of the session during the Thursday trading hours, and then dipped towards the $2.85 level. We have broken out to the upside, but quite frankly this should into being and I selling opportunity. The market tends to run into serious trouble every time we get close to the $3.00 level, and to be honest with you I would be a bit shocked if we got that high. I’m looking for any signs of weakness to start shorting, as I believe that we will eventually build up enough pressure to break down below the $2.85 level. After that, the market should then go to the $2.75 level, which is the next major support barrier. Given enough time, I think that the sellers will return, because quite frankly we are far oversupplied and natural gas, and it would take something major to change things.
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