Oil stuck in tight range at beginning of busy week
Traders are risk averse as they await US election, Fed’s policy meeting and China’s National People’s Congress meeting
05 November 2024 - 08:19
by Florence Tan and Gabrielle Ng
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Singapore — Oil prices traded in a narrow range on Tuesday ahead of what is expected to be an exceptionally close US presidential election, after rising more than 2% in the previous session as Opec+ delayed plans to hike production in December.
Brent crude futures ticked up 14c, or 0.19%, to $75.22 a barrel by 4am GMT, while US west Texas Intermediate (WTI) crude was at $71.6 a barrel, up 13c, or 0.18%.
“We are now in the calm before the storm,” IG market analyst Tony Sycamore said.
Oil prices were supported by Sunday’s announcement from Opec and its allies, a group known as Opec+, to push back a production hike by a month from December as weak demand and rising non-Opec supply depress markets.
Still, risk-taking remained limited with a busy week — including the US election, the Federal Reserve’s policy meeting, and China's National People’s Congress (NPC) meeting — keeping many traders on the sidelines, said Yeap Jun Rong, market strategist at IG.
For now, polls suggest the US presidential race will be closely contested, and any delay in election results or even disputes could pose near-term risks for broader markets or drag on them for longer, added Yeap.
“Eyes are also on China’s NPC meeting for any clarity on fiscal stimulus to uplift the country's demand outlook, but we are unlikely to see any strong commitment before the US presidential results, and that will continue to keep oil prices in a near-term waiting game,” Yeap said.
Meanwhile, Opec oil output rebounded in October as Libya resumed output, a Reuters survey found, though a further Iraqi effort to meet its cuts pledged to the wider Opec+ alliance limited the gain.
More oil could come from Opec producer Iran as Tehran had approved a plan to increase output by 250,000 barrels a day, the oil ministry’s news website Shana reported on Monday.
In the US, a late season tropical storm predicted to intensify into a category 2 hurricane in the Gulf of Mexico this week could reduce oil production by about 4-million barrels, researchers said.
“Technically, crude oil needs to rebound above resistance at $71.50/72.50 to negate the downside risks,” IG's Sycamore said, referring to WTI prices.
“All of which suggests there won’t be a scramble to chase it higher in the short term.”
Ahead of US weekly oil data on Wednesday, a preliminary Reuters poll showed on Monday that US crude stockpiles likely rose last week, while distillate and gasoline inventories fell.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil stuck in tight range at beginning of busy week
Traders are risk averse as they await US election, Fed’s policy meeting and China’s National People’s Congress meeting
Singapore — Oil prices traded in a narrow range on Tuesday ahead of what is expected to be an exceptionally close US presidential election, after rising more than 2% in the previous session as Opec+ delayed plans to hike production in December.
Brent crude futures ticked up 14c, or 0.19%, to $75.22 a barrel by 4am GMT, while US west Texas Intermediate (WTI) crude was at $71.6 a barrel, up 13c, or 0.18%.
“We are now in the calm before the storm,” IG market analyst Tony Sycamore said.
Oil prices were supported by Sunday’s announcement from Opec and its allies, a group known as Opec+, to push back a production hike by a month from December as weak demand and rising non-Opec supply depress markets.
Still, risk-taking remained limited with a busy week — including the US election, the Federal Reserve’s policy meeting, and China's National People’s Congress (NPC) meeting — keeping many traders on the sidelines, said Yeap Jun Rong, market strategist at IG.
For now, polls suggest the US presidential race will be closely contested, and any delay in election results or even disputes could pose near-term risks for broader markets or drag on them for longer, added Yeap.
“Eyes are also on China’s NPC meeting for any clarity on fiscal stimulus to uplift the country's demand outlook, but we are unlikely to see any strong commitment before the US presidential results, and that will continue to keep oil prices in a near-term waiting game,” Yeap said.
Meanwhile, Opec oil output rebounded in October as Libya resumed output, a Reuters survey found, though a further Iraqi effort to meet its cuts pledged to the wider Opec+ alliance limited the gain.
More oil could come from Opec producer Iran as Tehran had approved a plan to increase output by 250,000 barrels a day, the oil ministry’s news website Shana reported on Monday.
In the US, a late season tropical storm predicted to intensify into a category 2 hurricane in the Gulf of Mexico this week could reduce oil production by about 4-million barrels, researchers said.
“Technically, crude oil needs to rebound above resistance at $71.50/72.50 to negate the downside risks,” IG's Sycamore said, referring to WTI prices.
“All of which suggests there won’t be a scramble to chase it higher in the short term.”
Ahead of US weekly oil data on Wednesday, a preliminary Reuters poll showed on Monday that US crude stockpiles likely rose last week, while distillate and gasoline inventories fell.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.