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Oil springs to life

Futures rally as stockpiles in the US take a dive.

By (AFP)

Published: Sun 14 Jun 2015, 9:35 PM

Last updated: Wed 8 Jul 2015, 2:47 PM

London — World oil prices rallied last week, supported by a drop in US stockpiles, while traders on the metals markets took their lead from movements in the dollar and Chinese data.


Crude futures rallied as data showed a much bigger-than-expected drop in US crude inventories, while the Organisation of the Petroleum Exporting Countries said demand would pick up. Oil prices had surged more than $2 on Tuesday on expectations that the US inventory data would reveal a drop. The Department of Energy indeed said that commercial stockpiles of US crude slumped by 6.8 million barrels last week to 470.6 million. A drop in US stockpiles is seen as an indicator of healthy demand in the world’s top crude consumer, supporting global prices. The Opec meanwhile stuck to its forecast that oil demand will pick up this year but warned that over-supply may still keep a “ceiling” on crude prices, even as it kept on increasing its own output to a two-year high. The Opec stuck to its prediction of total oil demand in 2015 of 92.5 million barrels per day, up 1.18 mbpd from 2014. Consumption is expected to pick up pace in the second half in line with a global economic rebound, the 12-country group said in its June monthly report. Oil prices meanwhile fell at the end of the week as the International Energy Agency predicted that a recent surge in world crude demand was set to end. Oil fell on Friday but still managed to show a sizeable gain over the week, despite the dollar rising as traders grew concerned about Greece’s troubled debt negotiations, traders said. By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in July jumped to $64.35 a barrel from $61.15 a week earlier. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for July increased to $59.99 a barrel from $57.54 a week earlier.

Precious metals

Gold prices won support from its status as a haven investment amid heightened market tensions over Greece. Analysts expect the precious metal to continue to win support from the buying of gold by central banks. Silver, used also in industry, dropped on weak Chinese demand prospects, traders said. By Friday on the London Bullion Market, the price of gold gained to $1,182.80 an ounce from $1,164.60 a week earlier. Silver fell to $15.93 an ounce from $16.15. On the London Platinum and Palladium Market, platinum edged up to $1,095 an ounce from $1,092. Palladium fell to $739 an ounce from $751.

Base metals

Base or industrial metals prices were mixed as traders responded to Chinese data. “The data suggest that although activity remains subdued, recent policy support is now helping to stabilise growth,” said Julian Evans-Pritchard, China economist at Capital Economics, referring to measures including central bank interest rate cuts. By Friday on the London Metal Exchange, copper for delivery in three months slipped to $5,898.50 a tonne from $5,919.50 a week earlier. Three-month aluminium grew to $1,748.50 a tonne from $1,730. Three-month lead slid to $1,852.50 a tonne from $1,913. Three-month tin declined to $14,940 a tonne from $15,210. Three-month nickel edged up to $13,035 a tonne from $12,905. Three-month zinc dipped to $2,112.50 a tonne from $2,137.50.


Prices won support from tight supply worries in Ghana, the world’s second biggest cocoa producer behind Ivory Coast. By Friday on Liffe, London’s futures exchange, cocoa for delivery in July stood at £2,094 a tonne, unchanged from the previous week. On the ICE Futures US exchange, cocoa for July rose to $3,109 a tonne from $3,092.


The market hit fresh six-year lows. Traders “seem to be roundly blaming the weakness” of Brazil’s currency, said Sucden brokers analyst Thomas Kujawa. Sugar on Thursday reached six-year lows at $344.20 a tonne and 11.61¢ a pound. By Friday on Liffe, a tonne of white sugar for delivery in August fell to $346.80 from $351.20 a week earlier. On ICE Futures US, unrefined sugar for July dropped to 11.67¢ a pound from 12.09¢.


Prices retreated on receding concerns about a potential supply deficit. On ICE Futures US, Arabica for delivery in July slid to 131.60¢ a pound from 135.65¢ a week earlier. On Liffe, Robusta for July eased to $1,711 a tonne from $1,722.


Prices declined on a slowdown in demand, including in key market China, traders said. On Friday, the Malaysian Rubber Board’s benchmark SMR20 fell to 158.95¢ a kilo from 162.90¢ a week ago. — AFP

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