OIL :US oil prices ended lower on September 17, after weekly government data showed domestic oil supplies unexpectedly rose. Light, sweet crude for October delivery settled down 46 cents, or 0.5pc, at $94.42/barrel on the New York Mercantile Exchange.

Prices fell as low as $93.93/barrel after the Federal Reserve concluded its two-day policy meeting. But oil prices pared those losses after it was clear the US central bank wasn’t making any sudden moves toward higher interest rates or other policy shifts that would boost the dollar.

Crude-oil stockpiles increased by 3.7m barrels to 362.3m barrels in the week ended September 12, the US Energy Information Administration said. The surprise increase in overall supplies offset a decline in oil stored in Cushing, Oklahoma, where the benchmark Nymex contract is priced. Low supplies at Cushing have boosted US oil prices in recent months on concerns that inventories at the hub could fall too low for oil to be easily pumped out of storage.

Earlier oil futures rebounded on the New York and London markets September 16, which analysts attributed largely to reported comments about a possible production cut for next year by the Organisation of Petroleum Exporting Countries.

Opec Secretary General, Abdalla-el-Badri said September 16 that Opec might lower its 2015 production quota by 500,000bpd to 29.5mbpd during the group’s November meeting in Vienna. Brent, the global benchmark, has slid more than $15 from its high in mid-June as ample global supplies and tepid demand weighed on the market. Brent prices have held below $100/barrel since September 9, and market participants have closely watched Opec for indications that the group would cut production in response to the weaker prices. WTI has tumbled 13pc since touching $107.73/barrel on June 20 as Asian and European economies have showed signs of slowing while crude output gained.

The IEA Oil Market Report for September trimmed global oil demand growth for 2014 and 2015 to 0.9mbpd and 1.2mbpd, respectively, because of a pronounced slowdown in demand growth in the second quarter of this year and a weaker outlook for Europe and China. Demand in 2015 is now set at 93.8mbpd, the monthly report informed subscribers.

The International Energy Agency cut its global oil demand forecasts for 2015 and said Saudi Arabia exported the least in almost three years as purchases slowed from China and Europe.

Global demand will increase by 1.2mbpd, or 1.3pc, to 93.8mbpd next year, the Paris-based adviser to 29 nations said in a report .The expansion is 165,000bpd less than it predicted a month ago. Second-quarter growth in consumption slid to a 2.5-year low, spurring Saudi Arabia’s shipments to the lowest since September 2011.

Brent crude futures slipped below $100/barrel this week for the first time in 14 months amid booming US shale output, constrained demand and speculation that crises in Iraq, Libya and Ukraine will spare oil supplies. US production is poised to hit a 45-year high next year, according to the Energy Department.

The agency lowered estimates for the amount of crude that the Opec will need to produce by 200,000bpd for this year and 300,000bpd in 2015.

Iraq’s production fell last month to the lowest level since January as bad weather disrupted loadings from the south of the country, declining by 60,000bpd to 3.1mbpd, according to the IEA. Libyan output recovered by 110,000bpd to 530,000bpd.

The IEA boosted estimates for non-Opec supply this year and next by 100,000bpd. Supply from non-Opec producers, led by the US, Canada and Brazil will increase by 1.3mbpd next year to 57.6mbpd.

GOLD

In the New York market, gold prices fell more than 1pc to fresh eight-month lows as the dollar rallied and investors worried about forecasts that the US Federal Reserve may be readying for faster pace of interest rate hikes than previously projected.

Gold prices fell to their lowest level in more than eight months early September 18, as the US dollar rose in the wake of a Federal Reserve meeting, although the metal has bounced from its lowest levels. Earlier in the day gold for December delivery was $16.40 lower to $1,219.50/ounce on the Comex division of the New York Mercantile Exchange. Spot gold was down $3.75 to $1,219.35. December gold hit a low of $1,216.60 that was its lowest level since December 31. The low of $1,216.40 in spot metal was its weakest mark since January 6.

Gold headed for a third weekly decline after retreating to an eight-month low as the Federal Reserve raised its interest-rate forecasts, strengthening the dollar and damping demand for a store of value. Gold for immediate delivery traded at $1,224.63/ounce early September 19, in the Singapore market from $1,225.15/day earlier, when the metal dropped to $1,216.03, the lowest since January 2.

Gold prices have tumbled to their lowest since January 9 over the last week, bottoming out at $1,225.30/ounce. Since rebounding from its 2013 lows, gold has made a series of descending highs in what technical analysts say is a typically bearish pattern. Its recent break out of the triangle pattern it has been forming since the middle of last year suggests that further weakness is on the way.

China will give foreign investors direct access to its gold market for the first time as the biggest-consuming nation seeks to exert more influence over prices while boosting the yuan’s global use. The Shanghai Gold Exchange will start trading contracts in the city’s free-trade zone that will be linked to its domestic spot market and available to about 40 international members including Goldman Sachs Group Inc. and UBS AG. Access was previously limited to some Chinese subsidiaries. Gold in China this year cost as much as $31/ounce more and $42 less than the London spot price, according to data compiled by Bloomberg.

After a strong start to the year, which saw bullion reach almost $1,400/troy ounce, the gold price has been in reverse.

Published in Dawn, Economic & Business, September 22nd, 2014