Posted by pranjali upadhyay Posted on 05:25 with 1 comment
Crude oil prices were under pressure on Monday as investors turned their focus to the oversupply situation. However, losses were limited by expectations the proposed plan to curb production will be agreed upon next month when OPEC meets in Vienna.
Friday’s report from oil services company Baker Hughes which showed U.S. drillers added four rigs in the week-ending October 14.
In September, OPEC agreed to cut supply to between 32.50 million and 33.00 million barrels per day, and expects to finalize the details of the deal at its meeting in Vienna on November 30. However, OPEC pumped a record 33.6 million barrels of crude oil per day in September, with some members signaling they plan further increases.
Iranian vice-president said that his country needs to regain its market share.
Some investors are saying that the plan to cut output is not big enough to chip away at the oversupply especially since demand is low. Also Iran, Libya and Nigeria want to continue to produce at current or increased levels. Russia even said last week that it won’t agree to any production cuts.
The support base being formed by gold is potentially bullish, but it needs a few catalysts to create the momentum needed to breakout to the upside. These are:Drop in Treasury yields,profit-taking in the U.S. DollaFurther deterioration in U.S. equity prices.
Treasury yields could be under pressure because of comments from Yellen last Friday. She basically suggested the Fed may allow inflation to exceed the current 2.0% target before the central bank begins hiking rates. This has the potential to drive yields lower as well as the U.S. Dollar. Money could come flowing back into gold over the short-run if the dollar weakens.
Traders should watch the Treasury yields carefully and if they start to come off their highs, then this will mean that traders are starting to reduce the chances of a Fed rate hike in December.
The Ministry of National Economy of The Republic of Kazakhstan Committee on Statistic said October 17 the country’s refined copper and refined zinc output grew 4.3% and 1% year-on-year, respectively, in the first nine months of the year, according to wenhua.com.
According to the preliminary data from the General Administration of Customs, China's imports of unwrought copper and copper semis were 340,000 mt during September, with YTD imports from January to September at 3790,000 mt up 11.8 % YoY. China's exports of unwrought aluminum and aluminum semis were 390,000 mt in September, with YTD exports from January to September at 3470,000 mt, down 2.4 % YoY.