U.S. natural gas climbs to 2-week high with warm weather in focus

Commodities

U.S. natural gas futures rose for the second day in a row on Tuesday, as forecasts for warmer than normal temperatures across most parts of the continental U.S. in the days ahead boosted demand expectations for the cooling fuel.

Natural gas for delivery in September on the New York Mercantile Exchange touched an intraday peak of $2.740 per million British thermal units, the most since August 9.

It was last at $2.722 by 10:35AM ET (14:35GMT), up 4.3 cents, or 1.61%.

On Monday, futures soared 9.5 cents, or 3.68%, as traders reacted to forecasts for scorching heat across most of the country through September 5.

According to AccuWeather, the high in Washington DC on September 1 is expected to be 87 degrees Fahrenheit (31 Celsius), three more than normal.

Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.

Meanwhile, market players looked ahead to weekly supply data due on Thursday, which is expected to show a build of approximately 24 billion cubic feet.

That compares with a gain of 22 billion cubic feet in the preceding week, 67 billion a year earlier and a five-year average of 66 billion cubic feet.

Total U.S. natural gas storage currently stands at 3.339 trillion cubic feet, according to the U.S. Energy Information Administration, 10.9% higher than levels at this time a year ago and 13.8% above the five-year average for this time of year.

Natural gas futures have recently been under heavy selling pressure amid speculation that August heat won’t prevent stockpiles from reaching a record before the winter.

Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.

Source by Investing.com

Goldman Sachs reiterates oil forecast but warns outlook ‘tenuous’

Commodities

Goldman Sachs warned that the recent rally in oil prices was not based on fundamentals and played down recent hopes that an agreement between members of the Organization of Petroleum Exporting Countries (OPEC) would be able to sustain current prices.

"While oil prices have rebounded sharply since August 1, we believe this move has not been driven by incrementally better oil fundamentals, but instead by headlines around a potential output freeze as well as a sharp weakening of the dollar," Goldman said in a note to clients dated August 22.

Hopes that OPEC may come to an agreement to stabilize the market in informal talks to be held on the sidelines of the International Energy Forum in Algeria on September 26-28 helped oil enter a bull market with prices up more than 20% through last Friday.

“We are, in Saudi Arabia, watching the market closely, and if there is a need to take any action to help the market rebalance, then we would, of course in cooperation with OPEC and major non-OPEC exporters,” the country’s energy minister Al-Falih said on August 11.

Goldman remained skeptical about the effectiveness of such a freeze, which could become “self-defeating” as higher prices incentivized increased output elsewhere.

"Thawing relationships between parties in conflict in areas of disrupted production would be more relevant to the oil rebalancing than an OPEC freeze, which would leave production at record highs," these analysts said.

"A production freeze would also likely prove self-defeating if it succeeded in supporting oil prices further, with the US oil rig count up 28% since May," they added.

These experts also noted that Saudi Arabia and Iran continued to focus on market share, making it unlikely for a unilaterally accepted freeze, even while disruptions in supply from Nigeria, Iraq and Libya appeared to be easing.

"Given the large uncertainty on the timing, magnitude and duration of such supply shifts, we continue to view oil as having to price near-term fundamentals with a lower emphasis on the more uncertain longer-term fundamentals," they affirmed.

Goldman further downplayed the effectiveness of a production freeze because “even if flows fail to materially increase in each country, we reiterate our view that the oil price recovery is tenuous.”

The firm reiterated its forecast for Brent to remain between $45 and $50 through to next summer, but pointed to the downside in their own expectations for West Texas, warning that if easing of supply disruptions rebounded by 500,000 barrels more than they currently estimate, they would likely slash their 2017 forecast for U.S. crude to $45, from the current $52.5.

U.S. crude futures tumbled 1.08% to $46.90 by 10:14AM GMT, or 6:14AM ET, on Tuesday, while Brent oil slumped 1.10% to $48.62.

Source by Investing.com

Oil down 2 pct as rally snaps on rising crude, China fuel exports

Commodities

Oil prices fell more than 2 percent on Monday, retreating from last week's two-month highs, on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count.

China's July diesel and gasoline exports soared 181.8 percent and 145.2 percent respectively from the same month last year, putting pressure on refined product margins.

U.S. drillers added 10 oil rigs in the week to Aug. 19, the eight straight week of rig additions, as crude rebounded towards the $50 a barrel mark that makes drilling viable.

Iraq's plans this week to increase exports of Kirkuk crude by 150,000 bpd from northern fields weighed on prices, traders said.

Also hitting sentiment was an announcement by a Nigerian militant group that it was ready for a ceasefire and dialogue with the government. The group had in the past claimed a wave of attacks on oil facilities in the Niger Delta.

Data from market intelligence firm Genscape, showing a drawdown of over 187,000 barrels last week at the Cushing, Oklahoma delivery hub for U.S. crude futures, did little to shore up sentiment, traders who saw the numbers said.

Brent crude was down $1.34, or 2.6 percent, at $49.54 a barrel by 11:02 a.m. EDT (1502 GMT). Brent hit a two-month high of $51.22 on Friday.

U.S. West Texas Intermediate (WTI) crude's most active contract, October , fell $1.28, or 2.5 percent, to $49.60 a barrel. WTI's front-month contract, September , which expires at Monday's settlement, hit a six-week high of $48.75 on Friday.

Oil rallied with few stops over the past two weeks, going from a bear to bull market as it reversed a loss of over 20 percent in early August on speculation Saudi Arabia and the rest of the Organization of the Petroleum Exporting Countries will agree to a production freeze with Russia and other non-OPEC members.

"We continue to view a meaningful OPEC production agreement as highly unlikely," Wall Street investment bank Morgan Stanley (NYSE:MS) said in a note.

"It is unlikely Riyadh will take any freeze negotiation seriously as officials believe the market share policy is slowly but surely working," Morgan Stanley said, referring to Saudi Arabia's policy of defending market share above price support.

It, however, added that oil could be volatile between now and late September before OPEC and other producers meet in Algeria.

Based on the growing crude output and storage overhang in fuel, investment bank Barclays(LON:BARC) said crude at $50 and above was unsustainable.

"Oil prices will likely experience another short-term dip in the coming weeks," it added.

Source by Reuters

Oil tanks 3% on doubts over recent rally, fading OPEC hopes

Commodities

Oil prices fell sharply in North American trade on Monday, extending overnight losses as investors chose to cash in their gains following this month's impressive rally, which analysts warned was not justified by fundamentals.

Crude oil for October delivery on the New York Mercantile Exchange tumbled $1.19, or 2.42%, to trade at $47.92 a barrel by 8:32AM ET (12:32GMT).

On Friday, New York-traded oil futures rose to $49.36, the most since July 5. The U.S. benchmark rallied $4.03, or 9.06%, last week, the largest weekly gain in five months.

Meanwhile, on the ICE Futures Exchange in London, Brent oil for October delivery sank $1.37, or 2.71%, to trade at $49.55 a barrel after touching a high of $51.22 on Friday, a level not seen since June 22.

London-traded Brent futures surged $3.91, or 8.32%, last week, marking the best weekly gain since early April, as investors continued to bid up prices amid speculation major oil producers, led by Saudi Arabia and Russia, are reconsidering a collective production freeze in an effort to boost the market.

Crude futures are up almost $10 a barrel, or nearly 25%, from their August 2 lows, as the prospect of an output freeze by major producers sparked a massive rally.

The market started to recover a little over two weeks ago, when Saudi Arabia’s energy minister said the country would work with other oil producers to stabilize prices at an informal OPEC meeting in Algeria next month.

The rally received additional support after Russia expressed willingness to participate in those talks, which some say could lead to a pact to freeze production levels.

However, market analysts remained skeptical that the meeting would result in any concrete actions.

An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus.

Despite recent gains, indications of an ongoing recovery in U.S. drilling activity combined with elevated stocks of fuel products around the world is expected to keep prices under pressure in the near-term.

According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week increased by 10 to 406, the eighth consecutive weekly rise and the 11th increase in 12 weeks.

Some analysts have warned that the current rally in prices could be self-defeating, as it encourages U.S. shale producers to drill more, underlining concerns over a global supply glut.

Source by investing.com

Gold slumps to 2-week low on Fed rate hike bets

Commodities

Gold prices were under pressure in European trade on Monday, falling to a two-week low as the U.S. dollar rallied amid indications the Federal Reserve could raise interest rates as early as next month.

Gold for December delivery on the Comex division of the New York Mercantile Exchange dropped to a session low of $1,335.40 a troy ounce, a level not seen since August 9.

It was last at $1,337.35 by 2:46AM ET (06:46GMT), down $8.85, or 0.66%, after falling $11.00, or 0.81%, on Friday.

Odds for a near-term rate hike mounted after Fed vice chairman Stanley Fischer said on Sunday that the U.S. economy was close to hitting the central bank's targets for full employment and 2% inflation.

Fischer's speech was just the latest piece of hawkish rhetoric from top Fed officials. Last week, San Francisco Fed President John Williams, New York Fed Chief William Dudley and Atlanta Fed President Dennis Lockhart all said a September rate hike may be on the table.

According to Investing.com's Fed Rate Monitor Tool, investors are pricing in a 15% chance of a rate hike by September, up from just 6% at the start of last week. December odds were at around 52%, compared to 46% on Friday.

The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.4% to 94.86 early Monday, as investors began to price in a greater likelihood that the Fed will raise rates this year.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

In the week ahead, market players will turn their attention to a highly anticipated speech by Fed Chair Janet Yellen at the annual meeting of top central bankers and economists in Jackson Hole, Wyoming, for fresh clues on the timing of the next U.S. rate hike.

In addition, investors will continue to focus on U.S. economic reports to gauge if the world's largest economy is strong enough to withstand a rate hike in the coming months, with Friday’s revised second quarter growth data in the spotlight.

Also on the Comex, silver futures for September delivery tumbled 45.5 cents, or 2.36%, to trade at $18.86 a troy ounce during morning hours in London, while copper futures dipped 1.6 cents, or 0.74%, to $2.151 a pound.

Source by Investing.com

Crude oil futures - weekly outlook: August 22 - 26

Commodities

Oil futures rose for the seventh straight session on Friday, remaining in bull market territory, as investors continued to bid up prices amid speculation major oil producers, led by Saudi Arabia and Russia, are reconsidering a collective production freeze in an effort to boost the market.

Crude pared some gains after a report showed the number of U.S. oil rigs rose for the eighth week in a row, underling concerns over a global supply glut.

On the ICE Futures Exchange in London, Brent oil for October delivery touched an intraday peak of $51.22 a barrel, the most since June 22, before giving back some gains to settle at $50.88 by close of trade, down a penny on the day.

For the week, London-traded Brent futures surged $3.91, or 8.32%, marking the best weekly gain since early April.

Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in September ended at $48.52 a barrel, up 30 cents, or 0.62%. It touched a session high of $48.75 earlier Friday, a level not seen since July 5.

New York-traded oil futures rallied $4.03, or 9.06%, on the week, the largest weekly gain in five months.

Crude futures have now surged almost $10 a barrel, or nearly 25% from their August 2 lows, officially charging into a bull market, as the prospect of an output freeze by major producers sparked a massive rally.

The market started to recover a little over two weeks ago, when Saudi Arabia’s energy minister said the country would work with other oil producers to stabilize prices at an informal OPEC meeting in Algeria next month.

The rally received additional support after Russia expressed willingness to participate in those talks, which some say could lead to a pact to freeze production levels.

However, market analysts remained skeptical that the meeting would result in any concrete actions.

An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus.

Despite recent gains, indications of an ongoing recovery in U.S. drilling activity combined with elevated stocks of fuel products around the world is expected to keep prices under pressure in the near-term.

According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week increased by 10 to 406, the eighth consecutive weekly rise and the 11th increase in 12 weeks.

Some analysts have warned that the current rally in prices could be self-defeating, as it encourages U.S. shale producers to drill more, underlining concerns over a global supply glut.

In the week ahead, oil traders will be focusing on U.S. stockpile data on Tuesday and Wednesday for fresh supply-and-demand signals.

Market players will also continue to monitor supply disruptions across the world for further indications on the rebalancing of the market.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Tuesday, August 23

The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.

Wednesday, August 24

The U.S. Energy Information Administration is to release its weekly report on oil and gasoline stockpiles.

Friday, August 26

Baker Hughes will release weekly data on the U.S. oil rig count.

Source by Investing.com

Gold / Silver / Copper futures - weekly outlook: August 22 - 26

Commodities

Gold prices ended Friday's session deep in negative territory, as investors digested a fresh batch of comments from key Federal Reserve policymakers on the possibility of a near-term interest rate hike by the U.S. central bank.

Gold for December delivery on the Comex division of the New York Mercantile Exchange slumped $11.00, or 0.81%, to settle at $1,346.20 a troy ounce by close of trade.

Odds for a near-term rate hike came back in focus after San Francisco Fed President John Williams signaled support for a September rate increase in a Thursday afternoon speech.

"In the context of a strong domestic economy with good momentum, it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later," he said.

Williams's speech was just the latest piece of hawkish rhetoric from top Fed officials. Earlier this week, New York and Atlanta Fed presidents William Dudley and Dennis Lockhart both said a September rate hike may be on the table.

According to Investing.com's Fed Rate Monitor Tool, investors are pricing in a 12% chance of a rate hike by September. December odds were at around 46%.

The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, tacked on 0.4% on Friday to close the week at 94.48, as investors began to price in a greater likelihood that the Fed will raise rates this year.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Despite Friday's losses, the yellow metal still ended with a weekly gain of $3.90, or 0.34%, amid conflicting messages over the timing of the next U.S. rate hike.

Minutes of the Federal Reserve's July policy meeting published earlier in the week showed committee members remained divided on the timing of the next rate hike, although there is general agreement that more data is needed before such a move.

A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.

For the year, the precious metal is up nearly 25%, boosted by concerns over global growth and expectations of monetary stimulus.

Also on the Comex, silver futures for September delivery tumbled 42.3 cents, or 2.14%, on Friday to settle at a seven-week low of $19.31 a troy ounce. On the week, silver declined 43.2 cents, or 2.19%, the third straight weekly loss.

Elsewhere in metals trading, copper for September delivery dipped 0.5 cents, or 0.02%, on Friday to end at $2.167 a pound. For the week, New York-traded copper prices tacked on 2.5 cents, or 1.26%, the first weekly gain in a month.

In the week ahead, market players will turn their attention to a highly anticipated speech by Fed Chair Janet Yellen at the annual meeting of top central bankers and economists in Jackson Hole, Wyoming, for fresh clues on the timing of the next U.S. rate hike.

In addition, investors will continue to focus on U.S. economic reports to gauge if the world's largest economy is strong enough to withstand a rate hike in the coming months, with Friday’s revised second quarter growth data in the spotlight.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, August 22

Canada is to release data on wholesale sales.

Tuesday, August 23

Bank of Japan Governor Haruhiko Kuroda is to speak at an event in Tokyo.

The euro zone is to release survey data looking at private sector activity.

The U.S. is to publish data on new home sales.

Wednesday, August 24

New Zealand is to report on the trade balance.

Australia is to release figures on completed construction work.

The U.S. is to produce a report on existing home sales as well as weekly data on oil supplies.

Thursday, August 25

The Ifo Institute is to report on German business climate.

The U.S. is to release data on jobless claims and durable goods orders.

The Jackson Hole annual meeting of top central bankers and economists due to take place in Wyoming from Thursday to Saturday kicks off.

Friday, August 26

Japan is to release data on inflation.

The U.K. is to release revised data on second quarter economic growth.

The U.S. is also to produce revised data on second quarter growth, as well as a second look at consumer sentiment from the University of Michigan.

Fed Chair Janet Yellen is to speak in Jackson Hole. Speculation is rife that she will use the speech to start the race for a rate hike as soon as September following a recent barrage of hawkish Fed speakers.

The annual Fed symposium has sometimes been used by Fed chairs to make important policy pronouncements.

Source by Investing.com

U.S. gas futures struggle for direction ahead of storage data

Commodities

U.S. natural gas futures flipped between gains and losses on Wednesday, as market players looked ahead to fresh weekly information on U.S. gas inventories to gauge the strength of demand for the fuel.

Natural gas for delivery in September on the New York Mercantile Exchange dipped 0.3 cents, or 0.11%, to trade at $2.614 per million British thermal units by 9:39AM ET (13:39GMT), after rising 2.7 cents, or 1.04%, on Tuesday.

Market players looked ahead to weekly supply data due on Thursday, which is expected to show an increase in a range between 24 billion and 35 billion cubic feet of gas in the week ended August 12.

That compares with a gain of 29 billion cubic feet in the preceding week, 52 billion a year earlier and a five-year average of 57 billion cubic feet.

Total U.S. natural gas storage currently stands at 3.317 trillion cubic feet, according to the U.S. Energy Information Administration, 10.9% higher than levels at this time a year ago and 13.3% above the five-year average for this time of year.

Meanwhile, updated weather forecasting models pointed to scorching heat along the U.S. east coast through August 21. The weather will then be hotter than normal in the Mid-Atlantic and Great Lakes region through August 26.

Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.

Natural gas futures have recently been under heavy selling pressure amid speculation that August heat won’t prevent stockpiles from reaching a record before the winter.

Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.

Source by Investing.com

Oil prices fall on doubts producers can agree output restraint

Commodities

Oil prices fell away from 5-week highs on Wednesday as analysts doubted possible producer talks to rein in ballooning oversupply would be successful.

Brent crude futures (LCOc1) were trading at $48.86 per barrel at 0702 GMT (3.02 a.m. ET), down 37 cents from their last settlement. Despite the dip, prices are still up over 17 percent since early August and remain not far off a five-week high of $49.36 a barrel reached the previous day.

U.S. West Texas Intermediate (WTI) crude (CLc1) was at $46.34 per barrel, down 24 cents from its last close, but still up 18 percent from early August.

Traders said that profit-taking following recent rallies was weighing on prices amid expectations that weekly U.S. EIA oil inventory data due later in the day would show the glut in crude and oil products supplies had widened.

"I think the U.S. inventory data will show a greater glut in products which would weigh on sentiment," a Singapore-based trader said, adding that strong July OPEC production figures would weigh on prices.

South Korea's crude oil imports rose 4.5 percent to 266.4 million barrels in the second quarter of 2016 from a year ago due to growing shipments from Iran after sanctions were lifted, while local oil consumption also increased on the back of low prices.

In the April-June period, Seoul imported 25.35 million barrels of Iranian crude oil, or 278,615 bpd, 123.3 percent above the 11.35 million barrels imported a year earlier when sanctions were imposed on Tehran's disputed nuclear program.

The fight for market share among some OPEC producers has fueled doubts that talks by producers to rein in oversupply would be successful.

"The rumor mill around producer cooperation has resumed, spurred by recent comments from Saudi Arabia's oil minister, allowing oil prices to gain," said French bank BNP Paribas(PA:BNPP).

Yet like many, BNP said it doubted a successful outcome.

"Given the dismal track record when it comes to recent producer cooperation, we are not holding our breath for an eventual freeze in output and even less so for a much-needed reduction in production to help re-balance the oil market."

An OPEC meeting in June also failed to reach an agreement to limit production, and the group's output has since reached new records.

On the demand side, BMI Research said that Chinese imports would be relatively weak, compared with previous record years, as "a domestic fuels glut and scheduled maintenance works at several refineries (will) keep a lid on imports over Q3", although it added that China's long-term imports would be strong due to falling domestic production.

Source by Reuters

Gold edges higher as dollar crashes on reduced Fed rate hike bets

Commodities

Gold prices edged higher in European trade on Tuesday, extending gains from the prior session as disappointing U.S. economic data tempered expectations of a near-term interest rate hike by the Federal Reserve, weighing on the dollar.

Gold for December delivery on the Comex division of the New York Mercantile Exchange tacked on $7.25, or 0.54%, to trade at $1,354.75 a troy ounce by 06:50GMT, or 2:50AM ET.

A day earlier, gold inched up $4.30, or 0.32%, after data showed the New York Federal Reserve’s index of manufacturing conditions unexpectedly contracted in August, raising concerns about the strength of third-quarter economic growth.

The disappointing report led investors to push back expectations for the next U.S. rate hike. Fed funds futures are currently pricing in just a 9% chance of a rate hike by September. December odds were at around 42%.

Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slumped to a more than one-week low of 95.06. It was last at 95.07 by early Tuesday, down 0.5% on the day.

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

The yellow metal flirted with a more than two-year high above the $1,370-level earlier this month before coming under pressure as a robust U.S. employment report revived speculation of a U.S. interest rate hike in the coming months.

But those hopes were dashed following the release of a recent string of unexpectedly weak data, including retail sales and nonfarm productivity.

U.S. inflation data due later in the day will be in focus, as investors attempt to gauge if the world's largest economy is strong enough to withstand an increase in borrowing costs in the coming months.

Other pieces of data scheduled for Tuesday include July housing starts and building permits, as well as industrial output for the same month.

For the year, the precious metal is up nearly 26%, boosted by concerns over global growth and expectations of monetary stimulus.

Also on the Comex, silver futures for September delivery climbed 18.5 cents, or 0.93%, to trade at $20.03 a troy ounce during morning hours in London, while copper futures gained 0.3 cents, or 0.16%, to $2.155 a pound.

Source by Investing.com