Crude dips in Asia on profit-taking, rig count, Trump-Xi eyed - Sean Seshadri

Crude oil dipped in Asia on profit taking after three days of gains and despite upbeat figures from China on manufacturing and services for March that gained more than expected in cautious trade as U.S. rig count data lies ahead and markets look to a meeting between President Donald Trump and China's Xi Jinping in Florida that is seen as high stakes on trade.

On the New York Mercantile Exchange crude futures for May delivery dipped 0.34% to $50.18 a barrel, while on London's Intercontinental Exchange, Brent eased 0.41% to $52.91 a barrel.

China's semi-official manufacturing PMI rose to 51.8, the China Federation of Logistics & Purchasing (CFLP) said Friday, beating the expected 51.6 level and releasing the figures one day ahead of the normal first of the month release and ahead of the Caixin PMI figures.

Earlier in Japan, household spending for February slumped 3.8% year-on-year, compared to a 1.7% decline seen. On a monthly basis however it rose 2.5%, beating the expected 0.4% rise.

Separately, national core CPI fell 0.2% for February year-on-year as expected, while unemployment dipped to 2.8% from 3.0%. Provisional industrial production for February rose 2.0% month-on-month, beating the expected 1.2% increase.

Market participants turn attention to Baker Hughes rig count, due to be released on Friday at 13:00 EDT. Data last weekrevealed that the number of active U.S. rigs drilling for oil rose by 21, the tenth weekly increase in a row. That brought the total count to 652, the most since September 2015.

The White House said Trump would host Xi next Thursday and Friday at his Mar-a-Lago retreat in Florida. It said Trump and his wife, Melania, would host Xi and his wife, Peng Liyuan, at a dinner next Thursday.

Overnight, crude futures settled higher on Thursday, amid optimism that an OPEC led production cut deal would be extended beyond June, following bullish comments from Kuwait oil chief Essam al-Marzouq.

Crude futures settled above the key $50-level, as crude prices hit a three-week high of $50.45, after Kuwait oil minister Essam al-Morzouq said his country was among several nations that supported the idea of extending the current deal between OPEC and non-OPEC members beyond June.

In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day (bpd) in an effort to combat the oversupply issue that has pressured prices over the last two years.

OPEC members have been high compliance with the deal to cut supply, which came into effect in January this year, while a ramp up in U.S. production of shale and crude has weighed on oil prices.

Despite, a dip in crude inventories on Wednesday, crude stockpiles remain at record highs – at over 520 million barrels, current crude supplies are up 6% over the past year. Rising U.S. crude stockpiles sparked concerns that OPEC may struggle to drain the glut in supply.

Oil edges up on Libya disruptions, but bloated U.S. market still weighs - Sean Seshadri

Oil prices edged up on Thursday, extending two days of increases as supply disruptions in Libya lifted the market, although bloated U.S. crude inventories curbed gains.

Prices for front-month Brent crude futures (LCOc1), the international benchmark for oil, were at $52.53 per barrel at 0445 GMT, up 11 cents from their last close.

In the United States, West Texas Intermediate (WTI) crude futures (CLc1) rose 19 cents to $49.70 a barrel.

The increases extended two days of gains which supported Brent well above $50 a barrel and lifted WTI within sight of that level.

Traders said supply disruptions in Libya were lifting the market and that falling U.S. gasoline inventories pointed to a tightening market there despite record crude stocks.

"Production issues ... deepened, with Libyan oil output falling to about 500,000 barrels per day due to the shutdown of pipelines from its biggest field," ANZ bank said on Thursday.

And while a rise in U.S. crude inventories weighed, ANZ said that "big falls in gasoline inventories, coming near the end of the refinery maintenance season, suggest crude oil inventories are on the cusp of declining".

U.S. gasoline stocks fell 3.7 million barrels in the week ending March 24, compared with expectations for a 1.9-million barrel drop, the Energy Information Administration (EIA) said on Wednesday.

U.S. crude inventories , however, rose 867,000 barrels to a record of nearly 534 million barrels.

Key for the direction of oil prices will be whether an initiative led by the Organization of the Petroleum Exporting Countries (OPEC) to cut oil production during the first half of the year will be extended, and how high compliance with the reduction targets will be.

OPEC, along with other producers including Russia, aims to cut output by almost 1.8 million bpd during the first half of the year.

OPEC compliance with its targets is expected to be 95 percent this month, up from 94 percent in February, according to Reuters surveys.

However, compliance could be lower by non-OPEC members like Russia, who have officially agreed to participate in the cuts.

"Russia's 300,000 bpd cut commitment particularly has been called into question," Eurasia Group said this week in a research report.

"While it remains possible Russia can scrape together a combination of outages and natural decline at some west Siberian brownfields and spin this as a 300,000-bpd output cut, it is highly unlikely Russia will achieve an absolute 300,000 bpd reduction during the tenure of the current agreement," it added.

As markets remain bloated halfway into the curbs, there is a broad expectation that the supply cuts will be extended into the second half of the year.

Crude prices dip in Asia as market mulls supply outlook - Sean Seshadri

Crude prices gave up early gains in Asia on Monday after a weekend meeting that saw some promise for the extension of a coordinated output cut by OPEC and non-OPEC key producers.

At the weekend, a joint committee of ministers from OPEC and non-OPEC oil producers has agreed to review whether a global pact to limit supplies should be extended by six months. Oil sector analysts said the lack of an immediate extension could drag on crude prices.

U.S. West Texas Intermediate crude for May on the New York Mercantile Exchange eased 0.19% $47.88. Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery fell 0.04% to $50.78 a barrel.

In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.

Last weeek, oil futures settled higher on Friday, but posted a weekly loss of around 2% as the market weighed rising shale production and record-high stockpiles in the U.S. against efforts by major producers to cut output to reduce a global glut.

Data from oilfield services provider Baker Hughes on Friday revealed that the number of active U.S. rigs drilling for oil rose by 21 last week, the tenth weekly increase in a row. That brought the total count to 652, the most since September 2015.

Meanwhile, the U.S. Energy Information Administration said on Wednesday that crude oil inventories rose by 5.0 million barrels last week to an all-time high of 533.1 million, feeding concerns about a global glut.

Oil has fallen sharply this month amid concern that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.

OPEC agreed in November last year to curb its output by about 1.2 million barrels per day between January and June. Russia and 10 other non-OPEC producers have agreed to jointly cut by an additional 600,000 barrels per day.

In total, they agreed to reduce output by 1.8 million barrels per day to 32.5 million for the first six months of the year, but so far the move has had little impact on inventory levels.

OPEC's latest monthly report showed global oil stocks in January rose to 278 million barrels above the five-year average.

Gold prices slip lower as U.S. dollar rebounds - Sean Seshadri

Gold prices slipped lower on Friday, as the U.S. dollar regained some strength ahead of a highly-anticipated vote on U.S. President Donald Trump’s healthcare bill.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were down 0.28% at $1,243.85, just off the previous session’s three-week high of $1.253,15.

The April contract ended Thursday’s session 0.20% lower at $1,247.20 an ounce.

Futures were likely to find support at $1,226.40, the low of March 23 and resistance at $1,253,15, Thursday’s high.

The dollar regained some strength as the vote on the U.S. administration’s healthcare bill was postponed on Thursday and rescheduled for Friday.

Trump warned House Republican lawmakers that he will leave Obamacare in place and move on to tax reform if they do not approve new legislation on Friday.

The healthcare vote is seen by investors as a test of his ability to implement key campaign promises such as tax reform and infrastructure spending.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.15% at 99.71, pulling away from Wednesday’s six-week low of 99.34.

A strong 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.

Market participants were looking ahead to a string of manufacturing and service sector activity data from the euro zone, due later in the day as well as U.S. data on durable goods orders.

Elsewhere in metals trading, silver futures for May delivery were little changed at $17.589 a troy ounce, while copper futures for May delivery fell 0.25% to $2.638 a pound.

Crude holds gains in Asia as market looks to U.S. rig count data - Sean Seshadri

Crude prices held gains in Asia on Thursday as markets shrugged off downbeat supply data so far this week from the U.S. and looked ahead to more data on the supply response.

On the New York Mercantile Exchange crude futures for April delivery rose 0.73% to $48.38 a barrel, while on London's Intercontinental Exchange, Brent gained 0.69% to $50.99 a barrel.

Market attention now turns to the weekly rig count report on Friday from oilfield services firm Baker Hughes. Last week, the report showed the U.S. oil rig count rose by 14 to 631, the ninth straight weekly increase.

Overnight, crude futures settled lower on Wednesday, after the latest Energy Information Administration (EIA) report showed a faster rise than expected in U.S. crude inventories.

For the week ended March 15, The EIA said that crude oil inventories rose by 5 million barrels to a record 533.1 million barrels compared to estimates of an increase of only 2.8 million barrels.

Gasoline inventories dipped by 2.811 million against expectations for a draw of 2.008 million barrels while distillate stockpiles fell by 1.910 million barrels, compared to expectations of a 1.386 million decline.

Crude futures have turned bearish this week as fears that a ramp up in U.S. crude and shale oil production may dampened OPEC’s efforts to rebalance supply and demand in the industry.

In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day (bpd) in an effort to combat the oversupply issue that has pressured prices over the last two years.

Oil prices slide on bulging U.S. crude inventories - Sean Seshadri

Oil prices slipped back to three-month lows on Wednesday after data showed U.S. crude inventories rising faster than expected, piling pressure on OPEC to extend output cuts beyond June.

A deal between the Organization of the Petroleum Exporting Countries and some non-OPEC producers to reduce output by 1.8 million barrels per day (bpd) in the first half of 2017 has had little impact on bulging global stockpiles of oil.

Benchmark Brent crude was down 82 cents at $50.14 per barrel at 0936 GMT (5:36 a.m. ET), after dropping to $50.05, its lowest level since OPEC announced on Nov. 30 its plan for cuts. The deal with non-OPEC states was reached in December.

U.S. light crude was down 70 cents at $47.54 a barrel, also slipping toward a three-month low.

"The lower the price goes, the higher the pressure on OPEC to extend cuts," Commerzbank (DE:CBKG) analyst Carsten Fritsch said.

Sources have said OPEC is inclined to extend but wants backing from non-OPEC producers, including Russia, even though such countries have yet to deliver fully on existing cuts.

On Tuesday, the American Petroleum Institute reported U.S. inventories climbed by 4.5 million barrels to 533.6 million last week, a bigger rise than the 2.8 million analysts forecast.

Investors now want to see whether Wednesday's figures from the Energy Information Administration, a unit of the Department of Energy (DoE), confirm the rise.

"A look below $50 (for Brent) is quite possible today if DoE data show a similar pattern, but it's impossible to say how far below $50," Commerzbank's Fritsch said.

U.S. shale oil producers have been adding rigs, pushing up the country's oil production to about 9.1 million bpd, from around 8.5 million bpd in late 2016.

"OPEC's market intervention has not yet resulted in significant visible inventory drawdowns, and the financial markets have lost patience," U.S. bank Jefferies said in a note.

The bank said OPEC-led cuts would start having an impact in the second half of 2017, but added that U.S. crude production was expected to grow by 360,000 bpd in 2017 and 1 million bpd in 2018.

U.S. bank Goldman Sachs (NYSE:GS) warned its clients in a note this week that a U.S. shale-led production surge "could create a material oversupply in 2018-19".

U.S. natural gas extends gains to reach 5-week highs - Sean Seshadri

U.S. natural gas futures extended gains to a third session on Tuesday, hitting the strongest level since February as forecasts showing cooler weather on the way continued to boost the heating fuel.

U.S. natural gas for April delivery rallied 5.0 cents, or around 1.6% to $3.092 per million British thermal units by 8:55AM ET (12:55GMT).

It reached a daily peak of $3.099 earlier, a level not seen since February 10, after jumping almost 10 cents, or more than 3%, on Monday.

Cool temperatures will sweep across the Great Lakes and eastern U.S. toward the middle of the week, according to forecasters at NatGasWeather.com, with overnight lows expected to drop well below freezing.

Temperatures are expected to remain much colder than normal through the end of the week, with highs struggling to reach the 30s, while overnight lows drop into the teens to below 0F.

A fast-moving weather system will then impact the east-central U.S. Saturday into Sunday, followed by warming Monday, but again cooling off mid-week.

Meanwhile, market participants looked ahead to weekly storage data due on Thursday, which is expected to show a draw in a range between 150 and 160 billion cubic feet in the week ended March 17.

That compares with a withdrawal of 53 billion cubic feet in the preceding week, a build of 15 billion a year earlier and a five-year average drop of 21 billion cubic feet.

Total natural gas in storage currently stands at 2.295 trillion cubic feet, according to the U.S. Energy Information Administration, 7.7% lower than levels at this time a year ago but 15.8% above the five-year average for this time of year.

Prices of the heating fuel are down around 16% so far this year as forecasts for warm winter weather weighed on heating demand expectations.

Based on data from the National Oceanographic and Atmospheric Administration, this year’s extremely warm winter has pushed heating demand for natural gas to nearly 20% below average.

About half of U.S. homes use natural gas for heating.

Without significant demand for natural gas, inventories could stay near record levels and may even continue to pull prices even lower.

Oil cut extension may depend on non-OPEC compliance levels - Sean Seshadi

There has been talk of a possible extension of the six-month time frame of the OPEC-brokered output cut agreement among major oil producers.
OPEC agreed production cuts of 1.2 million barrels a day at the end of November, the first such accord in eight years.
Non-OPEC producers, led by Russia, also agreed to contribute cuts.

But oil prices have fallen from the highs hit after the agreement was announced, with U.S. crude struggling to hold onto $49 a barrel, levels last seen shortly after the deal was reached.
The International Energy Agency last week reported OPEC compliance with the cuts in the first two months of the year at 98%.
Non-OPEC compliance was estimated at only 37%.
Analysts are questioning whether top OPEC producer Saudi Arabia will agree to an extension if fellow producers are not delivering promised output cuts.
The IEA has estimated Saudi Arabia's compliance with cuts at 135%.
Saudi Arabia raised a few eyebrows in telling OPEC last week it had increased its output slightly in February from January.
Some observers interpreted the hike as a warning shot to other producers to comply with their obligations.

Gold prices edge lower but remain supported - Sean Seshadri

Gold prices edged lower on Friday, but still remained close to two-week highs thanks to a weaker U.S. dollar and the Federal Reserve’s dovish stance at its latest policy meeting.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were down 0.09% at $1,226.05, just off the previous session’s two-week high of $1.231,40.

The April contract ended Thursday’s session 2.20% higher at $1,227.10 an ounce.

Futures were likely to find support at $1,197.70, the low of March 15 and resistance at $1,231.40, Thursday’s high.

The greenback weakened broadly as the Fed’s policy statement was seen as less hawkish than expected by sticking to projections of three total rate hikes in 2017 and not four as some traders had hoped for.

As expected, the Fed increased interest rates by 25 basis points to 1.00% from 0.75%.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 100.07, the lowest since February 9.

A weak U.S. dollar usually supports gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

Market participants were looking ahead to reports on U.S. industrial production and consumer sentiment due later in the day.

Elsewhere in metals trading, silver futures for May delivery slid 0.31% to $17.282 a troy ounce, while copper futures for May delivery dropped 0.58% to $2.662 a pound.