Crude oil prices take a breather after hitting 2016 highs
Published 2016-04-28 08:10:40| Amwal Al Ghad English
Crude futures pulled back from 2016 highs on Thursday as traders locked in profits after April's sharp rally, but analysts said falling U.S. production, strong investor appetite and a weakening dollar could push prices higher soon. International Brent crude futures were trading at $46.91 per barrel at 0638 GMT, down 27 cents from their last settlement. U.S. West Texas Intermediate (WTI) futures were down 20 cents at $45.13 a barrel. The dips came after both benchmarks rose on Wednesday to their highest levels for 2016 in what has been one of the steepest price increases in recent years. Both Brent and WTI have rallied more than 70 percent since their respective 2016 lows in January and February. Record crude storage figures may have spurred some investors to take profits on Thursday by closing long positions, traders said, and government data on Wednesday showed that U.S. crude stocks climbed 2 million barrels last week to an all-time peak of 540.6 million barrels. Despite the price falls, analysts said that sentiment had clearly turned bullish, and that further price rises were likely. "We ... appear to be at the beginning of a bull market," U.S. investment bank Jefferies said on Thursday. Analysts said falling output in the United States, where Energy Aspects said there were now even "murmurings of volumes falling short" of demand, and a weak dollar were supporting prices and attracting investors. "The recent trend of rising crude oil prices received another boost after U.S. output was shown to have fallen again last week," ANZ bank said, following a release by the U.S. Energy Information Administration (EIA) showing that crude oil production fell to 8.94 million barrels per day (bpd) last week, down almost half a million bpd from this time last year. While Jefferies said it expected the market to remain oversupplied in the near term, it said that crude inventories should begin to fall by the third quarter, "setting the stage for a fundamental recovery". Analysts said that further bullish momentum could emerge due to ongoing weakness in the dollar, which is down almost 6 percent this year against a basket of other leading currencies, as a weaker greenback makes dollar-traded crude cheaper to buy for countries using other currencies at home. The Federal Reserve said Wednesday that it would leave U.S. interest rates unchanged, while the bank of Japan said Thursday it would hold back from expanding stimulus. Jefferies also warned that global spare capacity, estimated around 2 million bpd, or 2 percent of demand, was "precariously low" given the frequency of unexpected disruptions recently, including pipeline interruptions and strikes, as well as "the dire fiscal situation of producers like Venezuela, Iraq and Nigeria."
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Get To Know
There’s only one day to the British referendum that will decide the U.K.’s relationship with Europe for generations to come—high time for a look at what will happen in the vote itself. First, the big picture. The issue is whether the country should exit the European Union or stay within the bloc. The “Leave” camp argue the EU is a very different proposition to the European Economic Community that Britain joined in 1973. Since then, its scope has widened to cultural, judicial and other areas beyond that economic Common Market. On the other side, the “Remain” camp argues that the U.K. gains in economic benefits, security and global influence from being a key member of a large bloc of nations. Those are the two sides in the June vote. Below is an explanation of who is eligible to cast a ballot and the other “mechanics” of the referendum. When will the result be known? What will happen next? Here key things to know about the in/out vote over the issue widely known as Brexit. What will the referendum question be? The wording is: “Should the United Kingdom remain a member of the European Union or leave the European Union?” There are two options for voters: “Remain a member of the European Union” or “Leave the European Union.” Coming up with a format wasn’t as straightforward as might be expected. The bill passed to allow the ballot to take place had a different question: “Should the United Kingdom remain a member of the European Union?” with a yes/no choice of response. But the original wording was changed after complaints that it was biased in setting out only the “remain” option. Voters in Wales will also see a Welsh version of the question on their ballot papers. When is voting day, and when do the results come in? Polling stations in England, Scotland, Wales and Northern Ireland will be open on June 23 between 7 a.m. and 10 p.m. local time, or 2 a.m. to 5 p.m. Eastern Time. The ballot count is expected to start as soon as the polling stations close. The result should be known by early morning on Friday, June 24, though this depends on the circumstances in the 382 local areas where the count is being carried out. The first set of results look likely to be released at 12:30 a.m. local time, the official Electoral Commission has said. About half of the counting areas are expected to have reported by 4 a.m., and about 80% by 5 a.m. They are expecting the final set of results at 7 a.m. Who can vote? Voters must be at least 18 years of age. Anyone who voted in May 5 local elections held in Scotland, Wales and Northern Ireland won’t need to re-register for June 23’s referendum. Figures showing how many people have signed up to vote will be released somewhere around five days before the referendum. This is who is eligible to vote in person or via mail: • British and Irish citizens living in the U.K. • British and Irish citizens who live overseas—any country, not just in the EU—who have registered to vote in the U.K. in the last 15 years • People from the Commonwealth who have permission to enter or remain in the U.K. The Commonwealth is an organization of 53 countries that mostly were formerly part of the British Empire. That means Indians, Australians and South Africans, for example, who are U.K. residents will be among those going to the ballot box. And while Fiji and Zimbabwe have been suspended from the Commonwealth, people from those countries who live in the U.K. can still take part in the referendum. • But people from the EU who reside in the U.K. won’t be able to vote, apart from citizens of Malta, Cyprus and Ireland. While people can vote by mail, one instance shows there may be risk in that. Some Britons who live in Germany and France have run into difficulties sending their prepaid Brexit ballots back to the U.K.
Oil prices rose above $48 a barrel on Tuesday as investors took advantage of a two-day slide in crude following Britain's vote to leave the European Union to lock in lower prices. The vote result sent global stocks and currencies spiralling down, though oil price losses were relatively limited due to expectations of strong summer demand in Asia and the United States, as well as tightening supplies after a two-year rout. A looming strike at several Norwegian oil and gas fields threatened to cut output in western Europe's biggest producer, also helped support prices on Tuesday. Brent crude futures were 2.3 percent, or $1.08, higher at $48.24 per barrel at 0836 GMT. U.S. West Texas Intermediate (WTI) futures were also 2.3 percent higher, up $1.06 at $47.39 a barrel. Sterling and London's FTSE 100 stock market index also recovered sharply on hopes of a coordinated central bank response to financial market losses. [MKT/GLOB] "Oil is recovering on some bargain hunting after the drop below $47 a barrel proved unsustainable and news of a possible strike in Norwegian oil and gas industry," said Commerzbank analyst Carsten Fritsch. He also said the turmoil in Europe was not expected to have a "meaningful impact on the physical global supply and demand balances". Oil fell more than 7 percent to seven-week lows in the previous two sessions on the back of the British vote to leave the EU, which reduced investor appetite for volatile commodities such as oil. A strike in Norway, which could start this Saturday, would add to a number of production outages in oil producing countries including Nigeria and Libya in recent weeks. Still, news a successful ceasefire in Nigeria had allowed repairs to oil pipelines that had restricted the country's ability to export oil weighed on market, ANZ Bank said. Oil production in Nigeria has risen to about 1.9 million barrels per day from 1.6 million (bpd) due to repairs and to the fact there has not been a major pipeline attack for more than a week, a state oil company spokesman said on Monday.
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