5 February 2016

MARKET OUTLOOK OF CRUDEOIL 05 FEB 2016

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Crude Oil fell 2 percent in volatile trading on Thursday, as support from a weakening dollar was overshadowed by scepticism that cash-strapped OPEC member Venezuela's effort to lobby crude producers for joint output cuts would succeed. The dollar extended its drop for a second day, making greenback denominated commodities cheaper for holders of other currencies, with the dollar index hitting a roughly 15-week low on continued doubts that the Federal Reserve would be able to hike interest rates this year. Speculation about possible talks between the Organization of the Petroleum Exporting Countries and other oil producers to cut output increased volatility in the oil markets. Global benchmark Brent traded above $35 a barrel earlier in the session, adding to the previous session's 7 percent jump, after an Iranian official was quoted as saying Tehran supported a meeting, raising hopes that they could take action to support prices despite widespread skepticism in the market.
Iran's role in any potential deal to rein in production is critical, as it appears determined to boost production and gain market share after the lifting of sanctions. Venezuelan Oil Minister Eulogio del Pino said he had a "good and productive" meeting with his counterpart from Qatar, holder of the OPEC presidency in 2016, without giving more details. Crude oil futures were steady in lacklustre trading on Friday as Asian liquidity faded ahead of the Lunar New Year holiday across large parts of the region. Oil prices have been extremely volatile since the start of the year, and in particular this week, as a string of bullish indicators like a slump in the dollar and potential talks on output cuts clashed with bearish reports of record U.S. crude inventories, higher output and a slowing global economy. MCX Crude Oil Feb is trading at 2155. It is trading down by 26.
Outlook: We expect crude oil prices to trade positive on the back Comments by Russia's foreign minister.

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