Oil prices flutter around even in light trading

The market continues to test $70 per barrel, though a medium-term forecast from Moody's, noted in a comment on Gulf Cooperation Council producers, put the ceiling at $60.
By Daniel J. Graeber  |  Jan. 15, 2018 at 10:25 AM
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Jan. 15 (UPI) -- Light trading on the U.S. federal holiday left crude oil prices around neutral, but still marching closer to $70 per barrel, potentially on geopolitical risk.

Markets in the United States are closed as the nation commemorates the legacy of civil rights leader Martin Luther King Jr.

On Friday, markets wavered but eventually rallied after U.S. President Donald Trump decided to extend a waiver on oil-related sanctions for Iran under the terms of the multilateral Joint Comprehensive Plan of Action. The president must regularly weigh sanctions and not extending them would've pulled the estimated 1 million barrels of Iranian oil flowing in the global market, and inevitably led to the end of the agreement.

On its face, the wavier would've sent oil prices lower because it left Iranian barrels alone, but the U.S. president signaled this may be the last time he considers concessions, stressing repeatedly the deal was a bad one.

On Monday, Ole Hanson, the head of commodity strategy at Saxo Bank, said in an emailed market report that bullish bets were extending across all major commodities, driving the general momentum for the year.

"For a third consecutive week the buying was concentrated in energy and precious metals, not least crude oil and gold," he said.

Major indices for crude oil prices fluctuated between small gains and losses in overnight trading. The price for Brent crude oil was down 0.17 percent at 9:17 a.m. EST to $69.75 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.02 percent to $64.31 per barrel.

In a sign of future demand trends, the Chinese government reported during the weekend it expected growth in gross domestic product for 2017 was 6.9 percent. Acceleration was apparent in the first two quarters, but some headwinds emerged during the third quarter. Official fourth-quarter data and full-year GDP figures are expected Thursday.

A consensus from the World Bank and International Monetary Fund put GDP growth for the world's second largest economy, behind the United States, at 6.8 percent.

For some of the economies in the Middle East, a report from Moody's Investors Service said the decision by the Organization of Petroleum Exporting Countries to balance the market isn't doing much for members of the Gulf Cooperation Council, whose six members include Saudi Arabia.

Moody's said geopolitical pressures may dim investor confidence and many of the GCC oil producers don't have much room for maneuverability because of OPEC production caps. Those production caps, now in their second year, are credited with supporting the price of oil.

For oil prices, Moody's said it was sticking with an upper limit medium-term ceiling of around $60 per barrel.

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