Crude Off Multi Month Highs, Mixed Undertone In Stocks Could Cap Gains

Crude......

MCX Crude oil

futures are trading a tick lower in early moves amid signs that some sell off would emerge in global prices ahead of the weekend. The counter slipped from above Rs 6400 per barrel yet again in last session after witnessing massive gains. However, the International Energy Agency stated that crude oil supply from non-OPEC countries would rise next year. However, oil had shot up to highest level in nearly an year and half as the recent Fed minutes suggested that the central bank would go slow in reducing the pace of its asset buying. WTI Crude futures hit a high above $107 per barrel but dropped thereafter. The commodity quotes at $104.74, down 17 cents per barrel right now. 

Geopolitical and other risks could pare any supply gains from a U.S. oil boom next year, the International Energy Agency warned Thursday, as it predicted global demand for the commodity will pick up pace. The caution comes as crude prices have already risen sharply on concerns an Egyptian crisis could cut shipments through the Suez Canal, dashing hopes a U.S. shale boom could put a lid on the prices that motorists pay at the pump.

In its monthly oil-market report, the IEA, which represents some of the world's largest oil consumers, said disruptions in the Middle East and North Africa region already have provided a major offset to rising North American supply and may continue to do so. In its first forecast for next year, the IEA said production from countries outside the Organization of the Petroleum Exporting Countries would rise by 1.3 million barrels a day, an annual growth rate that has only been achieved once in the last twenty years.

The largest increase will come from the U.S., whose output will be boosted by 530,000 barrels a day thanks to newly developed shale-rock formations. But the agency also cautioned non-OPEC supply could be 500,000 barrels a day less than it currently predict because of geopolitical and technical risks.

US stocks rallied yesterday as the after effects of the US Federal Reserve's policy meeting minutes continued to support sentiments. The minutes had showed that officials were split on the future of the central bank's stimulus program. The S&P 500 managed to hit a closing high. However, this failed to boost the shares in Asia and a mixed undertone is being noted in major indices. Crude could extend the current slide further if the global equities maintain this momentum. MCX Crude oil dropped nearly Rs 100 yesterday and currently trade at Rs 6280 per barrel, down Rs 3 per barrel on the day. Prices failed to break above Rs 6300 in early moves, indicating some resistance on the higher side.

Source by Commodity Insights