Commodities rocket on $100 oil talk, metals stress

Commodities rocket on $100 oil talk, metals stress

In the USA, total inventories of crude and refined products, excluding strategic petroleum reserves, fell by 10.6 MMbbl last week to the lowest level since March 2015, according to Energy Information Administration data.

USA crude oil futures ended almost 3% up at $68.47 a barrel on the New York Mercantile Exchange yesterday and is now trading firm $68.75 after touching a high of $68.94 a barrel, a level not seen since December 2014.

"US production has increased by 1 million barrels per day over the last 12 months, we expect similar rate of increase over the next 12 months", said Mr Welch.

The Joint Ministerial Monitoring Committee (JMMC) will make a recommendation to OPEC about whether or not the production cut deal should be extended into 2019.

Reuters reports that OPEC officials claim their supply quota plan with Russian Federation has had the intended effect of re-balancing the global oil market.

OPEC has since reversed course, reaching a deal with Russian Federation and other oil producers to cut output by 1.8 million barrels a day (MMBPD) starting in January 2017.

Before the EIA report, benchmark West Texas Intermediate (WTI) crude for May delivery traded up about 1.9%, at around $67.76 a barrel, and it rose to around $68.29 (up about 2.7%) shortly after the report's release. The main reasons for the hike is a report that USA crude inventories have declined.

The cartel and its partners will meet in Jeddah, Saudi Arabia, tomorrow, and Opec will meet on 22 June to review the cuts.

OPEC is closing in on the original target of the pact - reducing industrialized nations' oil inventories to their five-year average. The country - OPEC's biggest producer - is targeting a crude price of $80 or even $100, Reuters reported. The contract rose $1.90/Bbl, or 2.7%, to end the session at $73.48/Bbl.

"The fact that the gasoline inventory reduction was more pronounced than anticipated was due to record-high gasoline demand, which is extremely unusual outside the summer driving season", said Commerzbank analysts in a note. Total motor gasoline supplied (the agency's proxy for demand) averaged 9.4 million barrels a day for the past four weeks, up about 0.7% compared with the same period a year ago.

Further push to the bullish momentum was engaged when it become known that Saudi Arabia, the world's most influential oil producer, is seeking to push prices even higher.

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