Commodities: Crude slips as market looks ahead to Opec, demand-side factors

Crude oil surrendered some of its recent gains inspired by greater than expected slides in US stores last week, with traders already looking much further ahead to Opec's next meeting.

The cartel is due to meet on 25 May, and the market is speculating on whether the outfit will extend its late-2016 production pledges, which are due to expire at the end of June.

At 15:34 BST, Nymex-priced West Texas Intermediate crude was down 0.63% to $47.53 a barrel. Intercontinental Exchange-traded Brent was down 0.16% to $50.69 a barrel.

Jasper Lawler, senior market analyst at London Capital Group, noted that Brent had managed to hold above $50 a barrel.

"A fall in US inventories and renewed hopes that Opec and non-Opec nations will extend output cuts has helped oil carve out a temporary bottom," he said.

"Increasingly it feels like the issue for crude may not be supply so much as demand."

SwissQuote extended this train of thought in a research note looking ahead to next week.

"Against a backdrop of supply glut and subdued demand, we believe that the recovery in oil prices is quite limited, especially given the current set-up," it said.

"The cartel (Opec) will have to cut production more aggressively and for longer if it wants to lift prices substantially," said SwissQuote.

It added that only in the latter case may WTI peek above $55 a barrel, with the primary beneficiary again being the US shale industry.

"We do not rule out a recovery in crude oil prices in the short-term. However, we do not believe that a WTI above $55-$60 is sustainable without significant improvement of the fundamentals."

Meanwhile, on Comex, gold was up 0.39% to $1229.0 an ounce. Silver rose 0.83% to $16.40 an ounce, and copper gained 0.36% to 251.7 cents a pound.

"The recent market stress in the commodity space eased further on Friday, helped by talk of a revamped US-China trade deal," said Lawler.

"Silver, which has been decimated this month, hit a five-day high."

On the London Metals Exchange, three-month industrial metals were mostly ahead. Copper rose 0.77%, tin added 0.97% and aluminum rose 0.54%, but zinc fell 0.35%.