Commodities: Crude dives on US drilling fears after Trump quit Paris accord
Crude-oil futures are slip-sliding lower this balmy Friday afternoon in London as markets speculate that the US' quitting the 2015 Paris climate agreement might spark a ramp-up in shale drilling.
Just 24 hours ago crude prices were getting a shove higher as US stores showed better than expected draws last week after Opec extended its production curbs into 2018.
At 15:12 BST, Nymex-priced West Texas Intermediate crude was down 1.34% to $47.71 a barrel. Intercontinental Exchange-traded Brent shed 1.32% to $49.96 a barrel.
Trump's decision to take the US out of the 2015 Paris climate agreement sparked international dismay. Trump said he would attempt to renegotiate a new, 'fairer' deal.
"Trump's decision to remove America from the Paris climate agreement has sparked concerns that the country will ramp up its drilling," said Connor Campbell at Spreadex.
That, he added, would negate "any output cap implemented by Opec".
FXTM Research analyst Lukman Otunuga agreed, adding the the prospect of further US drilling fuelled long-standing oversupply woes, specifically in relation to shale output and Opec cuts.
"The selling pressure intensified on Friday with WTI Crude tumbling towards $47 as the prospect of more supply, in an already heavily saturated market, haunted investors’ attraction towards the commodity," said Otunuga.
"I believe the story about oil revolves around oversupply concerns with Opec's efforts to stabilize the markets repeatedly sabotaged by US shale," he said.
Although Opec and non-Opec members had agreed to extend the output cuts by another nine months, markets were clearly not impressed and the bearish price action.
"From a technical standpoint, WTI Crude is under pressure and the breakdown below $48 should encourage a decline towards $46," opined Otunuga.
Meanwhile, at 15:22 BST, on Comex, gold rose 0.57% to $1277.40 an ounce. Silver added 0.66% to $17.40 an ounce, and copper fell 0.99% to 256.20 cents a pound. All were off earlier lows.
"With uncertainty still a dominant theme across the markets, Gold could remain supported moving forward," said Otunuga.
He believed that, from a technical viewpoint, gold bulls needed to maintain dominance above $1260 for prices to appreciate towards $1275.
"In an alternative scenario, repeated weakness under $1260 is likely to open a path to $1245."
On London Metals Exchange, three-month industrial metals were mixed. Zinc fell 1.15% and aluminum shed 0.05%, while tin rose 0.62% and copper added 0.3%.