Commodities: Crude slip-slides lower as Saudi busts Opec production cap
(ShareCast News) - Both grades of crude-oil futures dived on Tuesday, with West Texas Intermediate slip-sliding through key support as major oil producer Saudi Arabia revealed it has pumped more in February.
At 15:33 GMT, Nymex-priced WTI crude was down 1.55% to $47.65 a barrel, and Intercontinental Exchange-traded Brent was down 1.15% to $50.76 a barrel.
Spreadex financial analyst Connor Campbell said crude's decline was because Saudi Arabia had let oil production creep above the cap set by Opec, which was introduced amid a still-continuing global supply glut of the black liquid.
The Kingdom upped its output by 263,300 barrels a day last month to 10.011m a day, reversing roughly a third of the reductions it undertook in January.
Its output continued to be below the 10.058m it was bound to under a November deal with other producers to slash their combined levels of production.
If one plugged in Saudi's self-reported figure for production, then OPEC's total output was at roughly 32.16m b/d last month.
The Russian Federation, Iraq and the United Arab Emirates had yet to deliver all the curbs promised.
SwissQuote said it expected to see deeper selling pressures, noting that WTI had busted below support given at $49.61 a barrel,
"We consider that further weakness are very likely," it said in a note.
This slide in oil came as the market looked to Wednesday's US Federal Reserve interest-rate call, with the market picking a rise after weeks of hawkish comment by central-bank officials.
It would be followed on Thursday by Bank of England issuing its interest-rate call, although it was widely expected to stand pat.
Meantime, UK is expected to trigger Article 50 of the Lisbon Treaty by the end of March as PM Theresa May's Brexit Bill nears Royal Assent.
"A strong sense of caution has gripped the financial markets on Tuesday with investors on standby ahead of an explosively volatile data-packed week," said FXTM research analyst Lukman Otunuga.
He was looking at wider market malaise, and in particular the almost flat-lining price of gold.
On Comex, gold was up 0.11% to $1204.4 an ounce, with silver up 0.14% to $17.0 an ounce and copper ahead 0.53% to 263.95 cents a pound.
"Gold remains at the mercy of US rate hike expectations with the prospects of an imminent interest rate increase this week quelling investor attraction towards the zero-yielding metal," said Otunuga.
"There is a likelihood that gold bears will challenge $1190 when the heavily anticipated rate increase becomes a reality. From a technical standpoint, weakness below $1200 could spark a selloff towards $1190."
Three-month industrial metals on London Metals Exchange were all higher. Zinc led, and was followed by copper, tin and then aluminum.
Among agriculturals, Chicago Board of Trade-priced corn was up 0.62% to 363.25 cents a bushel, with wheat up 0.29% to 431.75 cents a bushel.
On ICE, cocoa was up 1.29% to $2043 a MT, with cotton No.2 up 0.34% to 77.13 cents a pound. Live cattle fell 1.04% to 106.98 cents a pound.