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Crude trudges up early Fri in nod to supportive US stocks data – Vandana Hari

Petrochemical industry | 19 May 2017 10:30 IST |

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1. Crude futures were trekking up early Friday in Asia, building on the previous day’s modest gains in acknowledgment of bullish EIA weekly statistics on US crude and product stocks as well as gasoline demand earlier in the week. A bout of profit-taking that had pushed crude into the red early Thursday in Asia gave way to gains by market close later in the day. The risk-off sentiment that had pummelled stock markets Wednesday in the West and boosted gold as a safehaven asset also appeared to have eased a day later. The benchmark Dow Jones Industrial Average as well as the S&P 500 stock indexes closed higher Thursday, while gold lost some of its new-found lustre.

2. A declaration by the Saudi and Russian energy ministers at the start of the week that they had agreed to recommend an extension to the 1.8 million b/d of OPEC/ non-OPEC cuts to March 2018 after the expiry of the current agreement in June is expected to continue keeping market sentiment buoyant in the lead-up to the May 25 OPEC meeting.

3. The EIA Wednesday reported a draw of 1.75 million barrels in US commercial crude inventories for the week to May 12, not too far from consensus analyst expectations of a decline of 2.2 million barrels and in contrast to the American Petroleum Institute reporting an increase of 882,000 barrels Tuesday. Perhaps more critically for market sentiment, the EIA reported a decline of 413,000 barrels in gasoline stocks, also close to analyst projections of a draw of 500,000 barrels. Gasoline consumption averaged 9.452 million b/d in the week to May 12, according to the EIA, a marginal 44,000 b/d rise from the week before.

4. July ICE Brent futures were trading at $52.83/barrel at 0400 GMT (12.00 pm SGT, 9.30 am IST) Friday, up 32 cents from Thursday’s close. June WTI was changing hands around $49.73, 38 cents higher. The contracts closed 30 cents and 28 cents higher Thursday.

5. Meanwhile, the greenback, moving somewhat in tandem with the mood in the stock markets, ended a five-day losing streak to close higher at 97.879 Thursday, as measured by the Bloomberg spot US dollar index. It had eased to 97.816 at 0400 GMT Friday. The dollar typically has an inverse relationship with crude prices, as its gains make the commodity more expensive for buyers holding other currencies. The correlation between the two, though, has been weak in recent months, with the dollar’s volatility having no perceptible impact on crude prices.

Data In Sight

Vandana Hari

Founder, Vanda Insights


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