Oil

Oil prices steadied on Thursday, holding on to recent gains after forecasts for stronger oil demand by the International Energy Agency (IEA).

Benchmark Brent crude up 20 cents at $55.36 a barrel by 0930 GMT, after rising 89 cents or 1.6 per cent on Wednesday. US light crude was up 25 cents at $49.55 after gaining 2.2pc in the previous session.

Brent has now climbed more than $10 a barrel over the last three months and is close to where it was at the beginning of the year, trading between about $55 and $57 a barrel.

Wednesday’s gains followed an IEA report which raised its estimate of the current year’s global oil demand growth to 1.6 million barrels per day (bpd) from 1.5m bpd.

The IEA said a global oil surplus was beginning to shrink due to stronger-than-expected European and US demand, as well as production declines in Opec and non-Opec countries.

The Organisation of the Petroleum Exporting Countries and other producers, including Russia, have agreed to reduce crude output by about 1.8m bpd until March to support prices.

This week’s gains came despite the fact that data showed a large build-up in US crude inventories after Hurricane Harvey.

Energy Information Administration’s figures showed US crude inventories rose by 5.9m barrels last week, exceeding expectations.

US gasoline stocks slumped 8.4m barrels, the largest weekly decline since the data began in 1990.

US gasoline futures extended declines on Thursday as demand was expected to slip due to the effects of Hurricane Irma on Florida and Georgia. Distillate stocks fell by 3.2m barrels, the data showed.

Many refineries in the US Gulf are slowly returning to normal as they recover from floods and storm damage. ExxonMobil Corporation said it was restarting its 362,300-bpd refinery in Beaumont, Texas, for the first time since it was shut by Harvey.

Crude oil prices edged higher on Sept 13, after the International Energy Agency released its report showing that crude oil US supplies rose more than expected and the global oil demand this year will rise to its highest since 2015. West Texas Intermediate (WTI) crude oil was trading at 49.30 and Brent oil at 55.09 as of 0815 GMT.

WTI was up 11 cents, or 0.2pc, at $48.34 a barrel at 0944 GMT after dropping earlier in the day. Brent was up 13 cents, or 0.2pc, at $54.40 a barrel.

Gold

Gold fell to a 1½-week low last Wednesday, erasing earlier gains as the dollar index jumped, though a retreat in global stocks after Tuesday’s record high prevented deeper losses.

Spot gold was down 0.65pc at $1,322.91 an ounce by 1834 GMT after falling to $1,320.51, the lowest since Sept 1. US gold futures for December delivery settled down 0.4pc at $1,328.

The metal moved lower as the dollar index turned higher after a report showed US producer prices rebounded in August and as traders turned their focus to US consumer inflation data.

Concerns over North Korea’s nuclear ambitions were a key factor driving spot gold prices to 13-month highs last week at $1,357.54 an ounce. An easing of those worries helped lift equities to record highs early this week.

Demand for gold, seen as a safe investment in uncertain times, revived earlier after US President Donald Trump pledged stronger measures against North Korea, whereas Pyongyang promised to fight off what it said was the threat of a US invasion.

Investors in gold-backed exchange-traded funds (ETFs) were buying as prices fell. Holdings of the largest gold-backed ETF, New York’s SPDR Gold Trust, rose 0.35pc on Sept 12 from a day earlier.

Among other precious metals, silver was down 0.8pc at $17.77 an ounce. Platinum was 1.2pc lower at $975.05 an ounce, after falling to $973, the lowest since Aug 28. Palladium fell 1.7pc at $938.

In the London market, gold steadied after hitting a two-week low on Thursday last, as the dollar softened ahead of US consumer inflation data which will be closely watched for clues about the likely pace of Federal Reserve interest rate increases.

Spot gold was at $1,322.80 an ounce at 0940 GMT, little changed from $1,322.85 late on Wednesday last but above an earlier low of $1,318.75, its weakest since Sept 1.

Copper

Copper futures trading on the Comex market in New York suffered another sharp decline on Wednesday last, as analysts warn of a likely correction following week of speculative buying.

In massive volumes of 2.7 billion pounds in morning trade alone, copper for delivery in December slumped to a low of 6,550 a tonne, down more than 2pc from Tuesday’s close to a three-week low.

A fortnight ago copper hit an intra-day high just shy of $3.18 a pound (more than $7,000 a tonne), the highest since September 2014.

But disappointment about imports by China, responsible for some 46pc of global consumption of the metal, rising stock levels at LME warehouses and receding mine supply worries saw the rally come to a screeching halt.

The prospect of a weakening renminbi also emerged as a factor behind the pullback after Chinese policymakers this week relaxed rules to curb speculation against the yuan which had been in place for nearly two years.

Reports at the end of July that China is planning to ban the import of scrap copper by the end of next year sparked the rally from copper’s summer lows, but caught many in the industry by surprise.

However, while no-one downgraded the outlook for copper, consensus forecasts remain well below ruling prices.

Analysts project that prices will average $5,870 a tonne in the fourth quarter this year and $5,844 a tonne in the fourth quarter of 2018. The lowest forecast for this year’s fourth quarter is $4,899 a tonne and the maximum is $6,674.

Published in Dawn, The Business and Finance Weekly, September 18th, 2017