Commodities: Crude makes modest gains with Libya, UAE, Opec output in focus

Crude-oil futures made modest gains on Wednesday as the black liquid benefited from supply distributions in Libya, a drop in March production from United Arab Emirates (UAE) and speculation of cartel Opec extending its 2016 output pledges.

At 15:12 GMT, Nymex-priced WTI crude was up 0.37% to $48.55 a barrel. In parallel, Intercontinental Exchange-traded Brent was ahead 0.43% to $51.55 a barrel.

Oil has been in the midst of a global supply glut, with Opec promises on output more or less constantly in focus, alongside US shale production, rising US inventories and rig counts.

"Oil markets received a slight boost on Tuesday with WTI crude edging higher towards $48.80 after supply distributions in Libya and speculations of Opec extending the output cut enticed bulls to install light rounds of buying," said FXTM research analyst Lukman Otunuga.

"Regardless of the recent upside, oil prices remain gripped by the oversupply woes with the rapidly diminishing optimism over the effectiveness of Opec's supply cut limiting upside gains," he added in a statement.

However, UAE's Minister of Energy, Suhail bin Mohammed Faraj Faris Al Mazrouei, said the emirate had reduced its oil production by nearly 200,000 bopd in March due to maintenance works.

Otunuga noted that a build in the pending crude oil inventories report from the US Energy Information Administration this evening could expose oil markets to downside risks as the oversupply concerns haunted investor attraction further.

On Wednesday, the American Petroleum Institute said US crude oil inventories rose 1.9 MMbbls from March 17–24, 2017. It showed a cumulative build of 41 MMbbls in the last 13 weeks.

"From a technical standpoint, WTI Crude remains pressured on the daily charts with bears in firm control below $50. The current technical bounce could create a foundation for sellers to send WTI Crude back towards $48 and potentially lower," said Otunuga.

SwissQuote added that oil's bearish pressures seems to fade. "However, we consider that further weakness are very likely," it said in a note.

Meanwhile, on Comex, gold was down 0.22% to $1256 an ounce, with silver down 0.37% to $18.19 an ounce and copper down 0.28% to 266.85 cents a pound.

Otunuga, again, commented that with the ongoing Brexit developments likely to compound uncertainty, gold may challenge $1260 an ounce.

"From a technical standpoint, the metal remains bullish on the daily charts and a break above $1260 could open a path higher towards $1275."

Despite the yellow metal's slip on Wednesday, Otunuga added a vulnerable US dollar, coupled with concerns over the global reflation trade, had boosted gold’s allure.

Three-month industrial metals on London Metals Exchange were all rising. Tin was ahead 2.74%, zinc by 2.28%, copper by 1.96% and aluminum by 0.73%.

SwissQuote opined that overall gold appeared to be getting stronger.

"The momentum seems back to bullish despite some consolidation. Strong resistance is located at $1263. Hourly support can be found at $1224.10," said SwissQuote, noting the precious metal was expected to show further strengthening.