Oil

CUDE oil prices gained in the London market on April 19, ahead of a closely watched Spanish bond auction, bouncing from a two-month low set the previous session, with some investors seeing recent sharp falls as a good buying opportunity.

CUDE oil prices gained in the London market on April 19, ahead of a closely watched Spanish bond auction, bouncing from a two-month low set the previous session, with some investors seeing recent sharp falls as a good buying opportunity.Brent June crude gained 43 cents to $118.40 a barrel, after hitting $116.70, its lowest in more than two months. US May crude gained 18 cents to $102.85, after falling more than a dollar. The May contract expires on April 20.

US crude stocks jumped 3.86 million barrels to nearly 22.8 million in the week to April 13, the biggest four-week build since February 2009, US Energy Information Administration (EIA) data showed. US supplies gained 3.9 million barrels last week.

The increase exceeded analyst expectations for a rise of 1.4 million barrels. The build helped offset supply concerns due to a string of disruptions across the globe this year, as well as worries about the potential loss of oil from Iran due to European Union and US sanctions against the OPEC producer set to take effect in July.

Appetite for other crude grades could also increase, with Japan slashing Iranian crude purchases by almost 80 per cent in April versus the first two months of the year, as tightening sanctions make it tough to pay, ship and insure the oil.

Brent oil for June settlement rose $1.08 to $119.05 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate was at $15.46, up from $14.85 on April 18.

Crude for May delivery on the New York Mercantile Exchange was at $103.14 a barrel, up 47 cents. It slid 1.5 per cent on April 18, the most since April 4. The more-actively traded June contract was up 47 cents at $103.59 a barrel.

US crude stockpiles climbed to 369 million barrels, the highest level since May 27, the Energy Department data showed. Refineries operated at less than 85 per cent of capacity for a second week, according to the report.

The oil market is balanced and there is no need for OPEC to change its output quota if demand remains at current levels, Iraq’s Oil Minister said in an interview in London.

Ministers from the Organisation of Petroleum Exporting Countries are scheduled to meet on June 14 in Vienna.

On April 20, Brent held above $118 per barrel, with prices headed for their steepest weekly drop in more than three months as fears that the euro zone debt crisis could flare up again dented the demand outlook.

Disappointing data showing the number of Americans claiming unemployment benefits for the first time fell only slightly last week also capped gains in oil prices. Investors are now awaiting next week’s meeting of US Federal Reserve policymakers, which will be closely scrutinised for any hints of a third round of monetary easing by the world’s top oil consumer, which could have an impact on crude prices.

Brent crude gained 34 cents to $118.34 a barrel, on track for its steepest weekly loss in 14 weeks. US crude gained 44 cents to $102.71, after settling lower at $102.27 in the previous session.

The Spain sovereign debt auction went well, but the European economy is still very unstable which is affecting Brent prices. Spain sold 2.5 billion euros in 2-and 10-year bonds, at the top end of the targeted amount, but yields on the key 10-year bond were higher, reflecting fears that it may miss budget deficit targets.

US crude remained supported on expectations that an oil glut in the US Midwest would ease with an earlier-than-scheduled plan to reverse the flow of the Seaway crude pipeline.

Gold

Gold edged lower on April 19, as investors stood on the sidelines and awaited a key Spanish debt auction later in the day amid worries the euro-zone debt crisis could flare up again.

Gold, though traditionally seen as a safe haven during times of economic and political turmoil, has moved largely in tandem with riskier assets and against the dollar recently. Spot gold inched down 0.1 per cent to $1,639.46 an ounce on April 19. US gold was nearly flat at $1,640.50.

The upside is very heavy because the euro remains under pressure and the weak physical demand is not helping, according to the head of dealing at Wing Fung Precious Metals in Hong Kong. One might see prices test $1,600 level, which will attract some physical buying interest.

Physical buying interest from the world’s top two gold consumers, India and China, has been sluggish, even after a three-week strike by India’s jewelers. While gold prices are similar to those at the beginning of the year, physical buying interest has fallen tapered off, dealers said.

The amount of gold held by the SPDR Gold Trust, the world’s biggest gold-backed exchange-traded fund, stayed unchanged for the sixth straight session at 1,286.167 metric tones on April 18.

The world’s key gold ETF holdings stood at 70.274 million ounces (2,185.767 metric tones), down 0.9 per cent from an all-time high of 70.89 million ounces in mid-March. The sluggish investor interest in gold ETF also weighed on investor sentiment.

In a step that was mildly supportive of gold sentiment, an unnamed central bank official said China would increase liquidity via open market operations and cutting banks’ required reserves to steer the economy towards a soft landing.

The prospect of further easing raises inflation outlook, which benefits gold, seen as a good hedge against rising prices.

Gold rebounded from a five-week low amid renewed optimism that Greece will be able to tame its debt crisis and as a report showed increased US hiring. On April 18, gold declined to $1,663.40 an ounce, the lowest since Jan. 25. Gold futures for April delivery gained 0.7 per cent to settle at $1,683.90 on the Comex in New York. Prices retreated 2.9 per cent in the previous three sessions.

Gold held steady on April 20, in listless trading as persistent concerns about the euro-zone’s finances and disappointing US economic data put off most investors. Spot gold edged up 0.1 per cent to $1,644.15 an ounce, on course for a 0.9-per cent weekly fall. US gold inched up 0.2 per cent to $1,645.10.

Gold has fallen more than 1 per cent so far this month, in tandem with equities and other commodities, after markets rallied in the first quarter on brighter global economic outlook and prospects of accommodative monetary policy. Gold prices have been trapped in a range of roughly between $1,620 and $1,680 this month.

Copper

London copper futures eased on April 19 in cautious trade ahead of a key bond auction in Spain as growing worries of the resurgence of the euro zone debt crisis dimmed the outlook for global raw material demand.

Three-month copper on the London Metal Exchange ticked up 0.3 per cent to $8,070 a tone, after ending flat on April 18.The most-active July copper contract on the Shanghai Futures Exchange shed 0.3 per cent to 57,670 yuan ($9,100) a tone, after gaining more than two per cent in the previous session.

Investors are eyeing an auction of two- and 10-year Spanish bonds later on April 19. Spain’s 10-year government bond yield shot above six per cent earlier this week, raising fears the country would not be able to manage its public financing and would have to turn to a global bailout.

China will continue to lead global demand for copper while Latin America will remain the world’s biggest supplier, economic analysts said this week .China increasingly needs copper as it expands its intensive urbanisation and industrialisation programmes in a country where half its population still lives in rural areas.

Abundant stocks of copper in Chinese warehouses and throughout the copper production chain will push copper prices lower in the second quarter this year and a recovery is not expected until the second half of 2012, industry participants said on the sidelines of the CRU copper conference on April 18.

China’s inventories of copper in warehouses monitored by the Shanghai Futures Exchange, in bonded warehouses and inventories held by producers are well above 1 million tones, traders and producers said, a record high, and it will take a few months for these stocks to be depleted. China, the world’s largest copper buyer, consumes about 40 per cent of global production.

London copper traded slightly above $8,000 a tone on April 20, hovering around its previous close, as investors waited for more decisive trading cues.

Successful French and Spanish bond auctions on April 19, eased some fears over the euro-zone debt crisis, but the positive news was later offset by soft jobs data out of the United States. France and Spain sold all the bonds they wanted at auction, although for Spain the cost was rising yields, indicating growing concerns the government will not be able to tame its deficit.

Three-month copper on the London Metal Exchange fell 0.2 per cent to $8,036 a tone, after closing just one dollar lower on April 19, but is on track to record a 0.6 per cent weekly rise.