Oil Futures Ease in Asia After Friday's Bounce in U.S.
29 May 2017 - 02:56PM
Dow Jones News
By Biman Mukherji
Oil prices have slowly trended lower in Asian trading Monday,
reversing some of the gains seen ahead of the close in the U.S. on
Friday, as the post-OPEC environment continues to develope.
Crude futures slumped nearly 5% on Thursday after the
production-cut deal led by the Organization of the Petroleum
Exporting Countries was extended by nine months but not
deepened--disappointing some who anticipated output cuts would
increase. Oil, though, finished up nearly 2% Friday thanks to the
late U.S. gains.
Because of holidays Monday in China, the U.K. and the U.S.,
trading is set to be thin throughout Monday's global session. That,
though, could exacerbate movements one way or the other.
In recent trading, West Texas Intermediate crude for July
delivery on the New York Mercantile Exchange recently traded 0.3%
lower at $49.65 a barrel in the Globex electronic session. Brent
crude, the global benchmark, eased 0.1% to $52.10.
Daniel Hynes, commodities analyst with ANZ Bank, anticipates oil
prices rebounding into the third quarter "as the reality of
production cuts hits the markets. But the upside may be limited."
He sees oil possibly making a run toward $60 next quarter.
A potential near-term catalyst could be U.S. inventory data on
Thursday; they will be delayed a day this week because of the
Memorial Day holiday. U.S. oil inventories have fallen for six
straight weeks, government data show. That's a good sign as global
supplies remain well above the 5-year average, which is where
participates in the production cuts want inventories to get back
to.
"The market will remain hesitant and wait for data confirmation
before prices can move materially higher," said RBC. It added the
production-cut extension should result in a price floor slightly
above $50 a barrel.
The investment bank remains bullish longer-term on oil. RBC's
prediction is for WTI "to move into the mid-to-high-$60/barrel
range as global balances tighten" in the second half of 2017.
However, there remains danger that if prices sufficiently rise,
financially fragile countries might pull back on their compliance
thus far to the production cuts. Any such output boosts could then
crimp any price gains.
Nymex July gasoline futures were recently down 0.3% at $1.6210 a
gallon, diesel eased 0.2% to $1.5645 and ICE gasoil rose 0.3% to
$462.50 per metric ton.
Write to Biman Mukherji at biman.mukherji@dowjones.com
(END) Dow Jones Newswires
May 29, 2017 00:41 ET (04:41 GMT)
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