Crude palm oil price on August 22 decreases due to crude oil price decline

Oil prices fell in Asian trade on Monday as analysts doubted upcoming producer talks would be able to rein in oversupply, saying that Brent would likely fall back below $50 a barrel as August's over 20-percent crude rally looks overblown.

U.S. West Texas Intermediate (WTI) crude futures were down 55 cents, or 1.13 percent, at $47.97 a barrel.

International benchmark Brent crude oil futures were trading at $50.13 per barrel, down 75 cents, or 1.47 percent.

see: Asian crude oil prices down 1 percent

The drop in crude oil prices has triggered a negative sentiment which has caused CPO prices to trend downwards. The weakening of crude oil prices has reduced the demand for alternative fuels such as those made from CPO.

The CPO price for the most actively traded contract on the Malaysian commodities exchange today appears to be weakening. The price for the November 2016 contract, which is the most active contract, has fallen by -19 ringgit or -0.7 percent and is trading at 2,559 ringgit per ton.

See: CPO Price on August 19 Rises by 1.6 Percent Triggered by Weakening Ringgit

Analyst Vibiz Research Center estimates that the movement of CPO futures prices in subsequent trading will take into account the movement of crude oil prices, which if they continue to weaken will depress CPO prices. The price movement could also be influenced by the movement of the Ringgit currency and global demand and supply conditions.

CPO futures prices for the November 2016 contract on the Malaysian commodities exchange have the potential to test Support levels at 2,510 ringgit and 2,460 ringgit. The Resistance levels that will be tested if there is a gain are at 2,610 ringgit and 2,660 ringgit.

Freddy/VMN/VBN/Analyst-Vibiz Research Center
Editor: Asido Situmorang