Oil

In the Singapore market, Brent crude edged towards $109/barrel on April 16, coming off a six week high as mixed Chinese data and a gradual resumption of Libyan oil exports offset support from the Ukraine crisis. China the world’s second largest economy and oil consumer, said its first quarter GDP growth slowed to 7.4pc. Brent crude for June rose in early trade to $109.47/barrel, the highest since March 4.

Ukrainian forces launched a ‘special operation’ on April 15 against separatist militia in the Russian speaking East although action was limited. In Libya, the National Oil Corp was due to export its first cargo from the reopened Hariga port since a deal to end months of closures at its main oil terminals.

NOC lifted force majeure on Hariga port in the far east of the country, following a deal between the Libyan government and federalist rebels who have blockaded the country’s central and eastern terminals for eight months, depriving the state of the oil revenues on which its relies. Libya’s pre 2011 export capacity was close to 1.3m barrels/day, but the blockade has taken some 700,000 bpd offline and separate protests in the west of the country have also caused sporadic disruptions.

In the New York market, Benchmark Brent oil rose slightly on April 15 after news that Ukrainian armed forces launched military operations in the east of the country though gains were limited by the prospects of a resumption of oil exports from Libya. Brent had risen to a near six week high a day earlier after western powers agreed to expand sanctions against Russia over Ukraine.

Opec’s oil output fell to its lowest level this year in March. Production by Opec – which supplies more than a third of the oil consumed globally each day – fell by over half a million barrels a day last month to 29.6m barrels daily. A steep drop in Iraq’s oil output of nearly 300,000 barrels a day led the decline, though there was also a substantial downturn in production from Angola, Libya and Saudi Arabia last month.

Iraq’s oil production fell to 3.2m barrels/day, after having risen to its highest level in 35 years in February. Iraq has ambitious plans to increase its oil production after years of sanctions. Angola’s oil production fell to by 150,000 barrels/day, while Libya’s output declined by 118,000 barrels/day as blockades of key ports in the country’s east by rebels seeking greater autonomy continued to take their toll on the country’s oil sector.

Saudi Arabia also reduced its crude production by 81,000 barrels/day to 9.7m barrels daily in March. Meanwhile, supply from outside Opec is expected to continue booming this year, led by production growth in Canada and the US. Opec revised higher its forecast for non-Opec supply growth this year to 1.37m barrels/day, an addition of 60,000 barrels/day from its previous forecast. The group also lowered the amount of demand it expects for its oil this year by 100,000 barrels/day to 29.6m barrels/day.

Iran’s crude oil exports fell for the first time in five months in March, and are stated to drop further in April. Under the agreement reached in Geneva, Iran’s oil exports were to remain at an average 1m barrels/day for the six months to July 20, but since the signing last year, shipments to Asia alone had topped that mark until this month. The drop in crude exports to just over 1m barrels/day in March and to 953,000 barrels/day for April. The drops have come mainly because Japan did not take any cargoes in March and South Korea is not scheduled to take any shipments in April, according to tanker data.

Iran’s biggest customer China will increase loadings this month to 552,000 barrels/day, about a third higher than a year ago, after a decline in March to 458,000 barrels/day. Chinese buyers will account for almost 60pc of oil shipped by tanker from Iran in April. Crude going to India, Tehran’s No.2 customer, surged nearly 43pc in the first quarter of 2014, bringing a warning from the United States that it needed to hold the shipments closer to end-2013 levels of 195,000 barrels/day. India is scheduled to load in April about 145,000 barrels/day of Iranian crude, down from imports of 412,000 barrels/day in January.

Gold

In the Singapore market, gold extended losses to below $1300/ounce on April 16, after sliding the most in three weeks, on technical selling and fears of slackening demand in top consumer China. The metal’s losses come despite heightened geopolitical tensions in Ukraine. Safe haven bids for gold failed to emerge even after Kiev began an operation against separatist militia in the Russian speaking east. China’s economy grew at its slowest pace in 18 months in the first quarter of 2014, with signs of waning momentum already prompting limited government action to steady the world’s second largest economy.

In physical market news, Chinese firms may have locked up as much as 1000 tonnes of gold in financing deals, a report from the World Gold Council said, indicating a big slice of imports had been used to raise funds due to China’s tight credit conditions rather than to meet consumer demand.

Meanwhile palladium futures hit their highest level since 2011 on April 14, as heightened geopolitical tensions surrounding Russia and Ukraine have exacerbated supply worries at a time when a major strike is occurring in South Africa. Palladium for June delivery traded as high as $817/ounce on the New York Mercantile Exchange, which is the strongest level since August 2011. But in the next few days it had fallen to $811.5/ounce. Palladium has advanced 13pc this year as the threat of disruption to Russian exports added to supply concerns amid a miners’ strike in South Africa, the second biggest producer. Palladium is used in pollution-control devices in cars. Russia the world’s largest producer accounted for 40pc of production last year, with South Africa at 37pc. The metal is the key ingredient for catalytic converters in cars, capacitors in electronics, dental crowns etc.

In the London market, gold steadied around $1,300/ounce on April 17, as a lower dollar and accommodative US Federal Reserve monetary policy counter-balanced worries over the strength of Chinese demand and sales from gold-backed funds. Holdings in the world’s biggest exchange-traded fund, SPDR Gold Trust, fell 8.39 tonnes to 798.43 tonnes on April 16, the biggest daily outflow since late December.