Oil, gold prices jump on supply, interest rate outlook
London (Apr 9) Oil prices jumped on Friday to cap a week of gains, helped by more indicators of slowing US output and hopes for an output freeze at the coming producers’ gathering in Doha.
New York benchmark WTI for delivery next month gained 6.6 percent to US$39.72 a barrel. In London Brent North Sea crude for June surged 6.4 percent to US$41.94 a barrel.
Both contracts were up 8 percent or more for the week, with falling US stockpiles and weaker output helping sentiment.
On Friday the picture of a prolonged slowdown in North American oil production was boosted by another fall in the number of active drilling rigs in the US and Canada. Total US rigs fell by eight last week to a multidecade low of 354, according to the Baker Hughes weekly tally, compared with 760 a year ago.
Earlier in the week the US government reported another decline in domestic crude output to barely above 9 million barrels a day after peaking at about 9.7 million barrels a day a year ago.
In addition, US commercial crude inventories unexpectedly slumped in the week ending April 1. Together they supported buying in a market starved for signs of firming.
Meanwhile, traders were setting their sights on the April 17 meeting, led by Russia and Saudi Arabia, to discuss measures to stabilize prices, including a production freeze at January levels.
The week continued to bring conflicting signals on how the meeting might go.
Prices fell last week after Saudi Deputy Crown Prince Mohammed bin Salman said his country would limit output only if fellow producer Iran did the same.
“Oil sold off sharply in the wake of comments by Saudi Arabia stating that there would be no deal without Iran, and then saw a bounce after Kuwait came out and stated that a deal could go ahead without Iran,” IG analyst Angus Nicholson said.
Still, others clung to doubts about the prospects for a Doha production cap deal.
“Unfortunately, history is against anything coming out of the Doha meeting,” analyst David Lennox of Fat Prophets in Sydney said.
“But a lot of OPEC countries are feeling great economic pain, which might give them the impetus to take some positive action in cutting production,” he said.
PRECIOUS METALS: Gold posted it first weekly gain since early last month, as global economic-growth concerns boosted the metal’s appeal as a haven asset.
Gold jumped 1.1 percent on Thursday after US Federal Reserve minutes indicated policymakers remained cautious about raising US interest rates. Fed officials last month debated the steady US economic expansion against heightened global risks and reached a broad agreement on a go-slow strategy of raising rates.
Gold fell three of the previous four weeks and was unchanged last week, as a pickup in wages and a robust pace of job creation represented a vote of confidence that the US would hold up against an anemic global backdrop.
“People are still very concerned about the economy, and that’s what people are buying gold for,” Miguel Perez-Santalla, a sales and marketing manager at Heraeus Metals in New York, said in a telephone interview. “That all leads to the Fed not to raise rates, because they’re not convinced the economy can survive a rate hike.”
Gold futures for June delivery gained 0.5 percent to settle at US$1,243.80 an ounce at 1:46pm on Friday on the COMEX in New York, the first weekly gain since March 4.