Brent Oil to trade at only $90 by year-end – Commerzbank

Following last week’s massive setback, the latest recovery of oil prices is likely to falter. In the view of strategists at Commerzbank, oil prices should continue to decline until the end of the year.

Market will be amply supplied in the coming months

“The oil market should be more than amply supplied for the time being.”

“We now envisage a Brent price of only $90 by year-end.”

“The EU oil embargo that will come into force at the end of the year will probably prevent any further price slide.”

WANT TO DIRECT TALK OUR EXPERT CONTACT MONEY LIFE RESEARCH

Oil prices rise as chances of OPEC+ supply boost dim

Oil prices rose in European trading on Friday as attention turned to next week's OPEC+ meeting and expectations that it will dash U.S. hopes for a supply boost.

Brent crude futures for September settlement, due to expire on Friday, gained $2.30 to trade at $109.44 a barrel by 1200 GMT after touching their highest since July 5. The more active October contract was up $2.24 at $104.07.

U.S. West Texas Intermediate (WTI) crude futures rose $2.20 to $98.62 a barrel.

Both contracts are set for a second monthly loss, however, down 4.7% and 6.8% respectively.

A weaker dollar and stronger equities also lent support on Friday. A fall in the dollar makes oil cheaper for buyers with other currencies.

Global equities, which often move in tandem with oil prices, were up on the hope that U.S. monetary tightening would not be as hawkish as initially expected after disappointing growth figures. [MKTS/GLOB]

A Reuters survey forecast Brent and U.S. crude would average $105.75 and $101.28 a barrel respectively this year. [OILPOLL]

Front-month Brent futures are selling at a rising premium to later-loading months in a market structure known as backwardation, indicating tight current supply.

"The oil market in Europe is considerably tighter than in the U.S., which is also reflected in the sharply falling Brent forward curve," said Commerzbank (ETR:CBKG) analyst Carsten Fritsch.

A key driver will be the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, on Aug. 3.

OPEC+ sources said the group will consider keeping oil output unchanged for September, with two OPEC+ sources saying a modest increase would be discussed.

A decision not to raise output would disappoint the United States after U.S. President Joe Biden visited Saudi Arabia this month hoping to strike a deal to open the taps.

Analysts, however, said it would be difficult for OPEC+ to boost supply, given that many producers are already struggling to meet production quotas.

WANT TO DIRECT TALK WITH OUR EXPERT, REGISTER MONEY LIFE RESEARCH

Russia's Novak: Oil market is balanced but there are lots of uncertainties

Following his meeting with Saudi Arabia's energy minister, Russian Deputy Prime Minister Alexander Novak said on Thursday that they have discussed forecasts on oil prices.

"It is important to continue joint work at OPEC+ to avoid collapse on the oil market," Novak added and noted that the oil market is currently balanced while acknowledging that there were lots of uncertainties.

Market reaction

Crude oil prices showed no immediate reaction to these comments and the barrel of West Texas Intermediate (WTI) was last seen trading at $113.50, where it was down 2% on a daily basis.

WANT TO DIRECT TALK OUR MARKET EXPERT CONTACT MONEY LIFE RESEARCH

 Saudi Feb crude exports hit near two-year high

Saudi Arabia's crude exports in February rose to 7.307 million barrels per day (bpd), the highest level since April 2020, official data showed on Monday.

Crude oil exports in February rose 4.4% from about 7 million bpd reported for January.

The world's largest oil exporter's February crude production also rose to its highest level in nearly two years at 10.225 million bpd from 10.145 million bpd in the previous month.

Saudi Arabia's domestic crude refinery throughput fell 0.271 million bpd to 2.506 million bpd in February while direct crude burn fell 111,000 bpd to 291,000 bpd.

Monthly export figures are provided by Riyadh and other members of the Organization of the Petroleum Exporting Countries (OPEC) to the Joint Organizations Data Initiative (JODI), which published them on its website.

Get Best News And Analysis with us!

JOIN NOW: MONEY LIFE RESEARCH

Silver Price Analysis: XAG/USD rallies into the low $25.00s amid safe-haven bid, despite higher yields

Silver has seen a decent push higher on Monday amid geopolitical/China lockdown worries, shrugging off the headwind of higher yields.

XAG/USD has rallied back to near $25.20, up over 40 cents, and is eyeing late March highs at $25.85.

Fed speak and US inflation will be in focus this week and could test bullish conviction.

Risk-off trade in global equities as markets fret about recent news regarding the Russo-Ukraine war and the risk of a further widening of lockdowns in China has offset the negative impact of a continued sharp rise in global yields on precious metals markets. Indeed, though US 10-year yields have rallied a further 3-4bps to a fresh multi-year high above 2.75%, thus increasing the opportunity cost of holding non-yielding assets (like precious metals), spot silver (XAG/USD) trades with impressive on the day gains of more than 1.7%.

XAG/USD has rallied more than 40 cents from opening levels near $24.75 to current levels around $25.20 and, in doing so, broken to the north of its 21-Day Moving Average at $24.92. Technical buying on the break above a downtrend that had been in play since early March certainly seems to have helped. Bulls will now be eyeing a test of late March highs at $25.85 ahead of a potential run towards last month’s highs near $27.00.

But the silver bulls won’t be declaring victory for the week just yet, given a plethora of key upcoming risk events. A barrage of Fed policymakers will be speaking in the coming days (with a total of four appearing on Monday alone) and are likely to reiterate recent hawkish messages. But the main event(s) of the week will be the release of US Consumer and Producer Price Inflation data on Tuesday and Wednesday which, if they surprise to the upside, could exert even more pressure on the Fed to be hawkish.

Want to talk our CFA, CMT certified Analyst?

JOIN US TODAY: MONEY LIFE RESEARCH

 European Stocks Lower; More Russian Sanctions, Aggressive Fed Weigh

European stock markets traded lower Wednesday, weighed by the likely imposition of new Western sanctions on Russia as well as concerns of aggressive monetary tightening by the U.S. Federal Reserve.

By 3:40 AM ET (0740 GMT), the DAX in Germany traded 0.5% lower, the CAC 40 in France fell 0.5% while U.K.’s FTSE 100 dropped 0.1%.

The United States and Europe are set to announce later Wednesday new sanctions to punish Moscow over alleged atrocities in Ukraine, something Ukraine President Volodymyr Zelensky described as "war crimes" in a speech to the United Nations security council.

The European Commission has already proposed new sanctions including banning Russian coal imports and halting trade worth nearly 20 billion euros ($22 billion), and the White House said late Tuesday that its new measures will target Russian banks and officials and ban investment in Russia.

Russia’s invasion of Ukraine and the sanctions already levied by the West as punishment have roiled markets, causing sharp rises in commodity prices, prompting fears of sharply slower growth this year. 

German factory orders fell 2.2% on the month in February in the runup to Russia’s invasion of Ukraine, falling for the first time in four months and underscoring concerns over weaker growth in Europe’s largest economy. 

Also, dragging on the European markets are set to receive a negative handover from Asia and Wall Street after comments from Fed Governor Lael Brainard raised expectations of aggressive interest rate rises by the U.S. central bank, added to by hawkish comments from Fed Governor Lael Brainard, normally seen as one of the more dovish members of the central bank policymakers.

This puts the focus firmly on the release later Wednesday of minutes from the Fed's last policy meeting, with investors looking for clues over the likelihood of a 50 basis point hike at the U.S. central bank's next meeting in May.

In corporate news, Volkswagen (DE:VOWG_p) stock fell 2.7% after the German carmaker’s finance chief Arno Antlitz told the Financial Times that the company is likely to ditch many models by the end of the decade to concentrate on producing fewer cars overall but more profitable premium vehicles.

Vestas Wind Systems (CSE:VWS) stock fell 1.4% after the Danish wind turbine said that it would withdraw from Russia, where the firm has two factories.

Oil prices edged higher Wednesday, with traders having to balance supply concerns on the back of likely new sanctions on Russia with fears of weaker demand after a build in U.S. crude inventories and a prolonged COVID lockdown in Shanghai, the Chinese financial hub.

U.S. crude oil supply data from the industry body American Petroleum Institute, released late Tuesday, showed a build of just over 1 million barrels for last week, compared with the 3-million-barrel draw reported the previous week.

Investors now await official numbers from the U.S. Energy Information Administration later in the session for confirmation.

By 3:40 AM ET, U.S. crude futures traded 0.9% higher at $102.86 a barrel, while the Brent contract rose 1% to $107.67. 

Additionally, gold futures fell 0.4% to $1,919.50/oz, while EUR/USD traded 0.1% lower at 1.0891.

Want tp get more information about market and daily live signals

Text us now: MONEY LIFE RESEARCH

 Oil rises to $105 as supply fears perist despite reserves release

LONDON (Reuters) -Oil rose to $105 a barrel on Monday in volatile trade as the release of strategic reserves by consuming nations failed to eliminate supply fears arising from Russia's invasion of Ukraine and the lack of an Iranian nuclear deal.

The invasion in February heightened supply concerns that were already underpinning prices. Sanctions imposed on Russia and buyers' avoidance of Russian oil have already led to a drop in output and raised fears of larger losses. [IEA/M]

"Will the release of barrels from strategic reserves fill a shortfall caused by sanctions and buyer aversion to Russian oil? In a word, no," said Stephen Brennock of oil broker PVM.

Brent crude was up 92 cents, or 0.9%, at $105.31 a barrel by 1140 GMT. U.S. West Texas Intermediate crude gained 63 cents, or 0.6%, to $99.90. Both contracts were down more than $1 earlier in the session.

Crude dropped by about 13% last week after U.S. President Joe Biden announced a record U.S. oil reserves release and as International Energy Agency members committed to further tapping reserves. Crude had hit $139 last month, its highest since 2008.

"The massive release of 1 million barrels per day over a period of six months in the United States alone is likely to ensure that the oil market is no longer acutely undersupplied in the second and third quarters," Commerzbank (DE:CBKG)'s Carsten Fritsch wrote in a report.

Oil also gained support from a pause in talks to revive the Iran nuclear deal, which would allow a lifting of sanctions on Iranian oil. Iran on Monday blamed the United States for the halt.

Downward pressure came from a truce in Yemen, which could ease threats to supply in the Middle East.

The United Nations has brokered a two-month truce between a Saudi-led coalition and the Houthi group aligned with Iran for the first time in the seven-year conflict. Saudi oil facilities have come under Houthi attack during the fighting.