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Commodities

Oil rises but fears of weaker demand limit gains

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© Reuters. FILE PHOTO: Storage tanks are seen at Marathon Petroleum’s Los Angeles Refinery, which processes domestic & imported crude oil into California Air Resources Board (CARB), gasoline, diesel fuel, and other petroleum products, in Carson, California, U.S., Ma

By Sonali Paul and Isabel Kua

SINGAPORE (Reuters) -Oil prices extended gains on Friday but were headed for their first weekly loss in three weeks as worries about inflation and China’s COVID lockdowns slowing global growth offset concerns about dwindling fuel supplies from Russia.

Brent crude futures were up $1.81, or 1.7%, at $109.26 a barrel at 0403 GMT, while U.S. West Texas Intermediate (WTI) crude futures climbed $1.55, or 1.5%, to $107.68 a barrel.

Both benchmark contracts were, however, on track to post declines for the week, with Brent set to drop nearly 3% and WTI nearly 2%.

The market is continuing to be pushed and pulled by the prospect of a European Union ban on Russian oil tightening supply and concerns about faltering global demand.

SPI Asset Management managing partner Stephen Innes said that oil traders were looking “for a glimmer of light at the end of China’s gloomy lockdown tunnel”.

“Still, we continuously end up at square one with lower case counts weighted against the authorities doubling down on their zero COVID policy,” he added.

Inflation and aggressive rate rises have driven the U.S. dollar to 20-year highs, which has capped oil price gains as a stronger dollar makes oil more expensive when purchased in other currencies.

Analysts, however, continue to focus on the prospect of a European Union ban on Russian oil, after Moscow imposed sanctions this week on European units of state-owned Gazprom (MCX:GAZP) and after Ukraine halted a key gas transit route.

“With European natural gas prices soaring, it is inevitable that some spillover into oil will occur,” OANDA senior market analyst Jeffrey Halley said in a note.

“An escalation by Russia on the sanctions front is likely to flow into oil price strength,” he added.

An International Energy Agency report on Thursday highlighted the duelling factors in the market, saying rising oil production in the Middle East and the United States and a slowdown in demand growth are “expected to fend off an acute supply deficit amid a worsening Russian supply disruption”.

The agency said it saw output from Russia falling by nearly 3 million barrels per day (bpd) from July, or about three times more than is currently displaced, if sanctions for its war on Ukraine are expanded or if they deter further buying.

Commodities

Gold Down, Weighed Down by Aggressive Fed

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© Reuters.

By Gina Lee

Investing.com – Gold was down on Thursday morning in Asia, with a steady dollar and elevated Treasury yields weighing on the greenback-priced bullion, whose outlook has already been dampened by the U.S. Federal Reserve’s aggressive stance on inflation.

Gold futures edged down 0.20% to $1,812.34 by 1:31 AM ET (5:31 AM GMT). The dollar, which normally moves inversely to gold, edged down on Thursday.

Gold’s daily closing price is effectively hugging the trendline projected from its March 2020 low, and intraday volatile spikes on either side of that key trendline have lacked conviction to prompt a sustainable move, City Index senior market analyst Matt Simpson told Reuters.

The yellow metal has largely seemed to track daily moves in both the dollar and benchmark U.S. 10-year Treasury yields in recent weeks. A greenback near 20-year highs pushed gold to its lowest in well over three months on Monday.

Gold’s performance and outlook have also been impacted as the Fed adopts a more hawkish monetary policy stance on interest rate hikes.

Fed Chairman Jerome Powell on Tuesday said that the U.S. central bank would hike its interest rates as needed to curb inflation which he said threatened the foundation of the economy.

“ETF (Exchange traded fund) flows peaked on the 27th of April, and we’ve since seen a net outflow as investors have lost confidence in the yellow metal… and the rout in stock markets simply added another reason for some investors to convert their gold to cash,” said Simpson.

In Asia Pacific, Japanese trade data for April 2022 showing that exports rose 12.5% year-on-year and imports rose 28.2% year-on-year. The trade balance contracted to -¥839.2 billion (-$6.51 billion).

In other precious metals, silver inched up 0.1%, while platinum fell 0.9% and palladium was down 0.6%.

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Commodities

Oil Up as Economic Growth Worries Continue

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© Reuters.

By Gina Lee

Investing.com – Oil was up on Thursday morning in Asia, recovering from early losses as concerns over tight global supplies outweighed fears over slower economic growth.

Brent oil futures jumped 1.45% to $110.69 by 12:58 AM ET (5:58 AM GMT), after falling by more than $1 earlier in the session. WTI futures rose 1.07% to $108.18 recovering from an earlier loss of more than $2 and were up 56 cents, or 0.5%, at $107.60 a barrel for July 2022.

Both Brent and WTI benchmarks fell about 2.5% on Wednesday.

“A slump in Wall Street soured sentiment in early trade as it underlined concerns over weakening consumption and fuel demand,” Rakuten Securities commodity analyst Satoru Yoshida told Reuters.

Asian stocks on Thursday followed a steep Wall Street selloff, as rising global inflation, China’s zero-COVID policy, and the Ukraine war led to fears of an economic recession.

“Still, oil markets are keeping a bullish trend as a pending import ban by the European Union on Russian crude is expected to further tighten global supply,” said Yoshida.

The European Union earlier in the month proposed a new package of sanctions against Russia for its invasion of Ukraine on Feb. 24. The package includes a total ban on Russian oil imports in six months’ time, but the measures have not yet been adopted amid continued resistance to the plan from member countries including Hungary.

On Wednesday, the European Commission unveiled a €210 billion ($220.65 billion) plan for Europe to end its reliance on Russian fossil fuels by 2027.

Meanwhile, Wednesday’s U.S. crude oil supply data from the U.S. Energy Information Administration showed a draw of 3.394 million barrels for the week to May 13. Forecasts prepared by Investing.com predicted a build of 1.383 million barrels, while an 8.487-million-barrel build was reported during the previous week.

Crude oil supply data from the American Petroleum Institute released the day before, showed a draw of 2.445 million barrels. Capacity use on both the East Coast and Gulf Coast was above 95%, with those refineries near their highest possible running rates.

 

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Commodities

Oil prices recoup early losses on China hopes, global supply fears

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© Reuters. FILE PHOTO: Workers walk as oil pumps are seen in the background in the Uzen oil and gas field in the Mangistau Region of Kazakhstan November 13, 2021. REUTERS/Pavel Mikheyev

By Yuka Obayashi and Florence Tan

TOKYO (Reuters) -Oil prices rose on Thursday, recovering from early losses, on hopes that planned easing of restrictions in Shanghai could improve fuel demand while lingering concerns over tight global supplies outweighed fears of slower economic growth.

Brent crude futures for July were up $1.53, or 1.4%, at $110.64 a barrel at 0447 GMT, after falling by more than $1 earlier in the session.

U.S. West Texas Intermediate (WTI) crude futures for June rose 93 cents, or 0.8%, to $110.52 a barrel, recovering from an early loss of more than $2. WTI for July was up $1.57, or 1.5%, at $108.50 a barrel.

Both benchmark prices fell about 2.5% on Wednesday.

“A slump in Wall Street soured sentiment in early trade as it underlined concerns over weakening consumption and fuel demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities. [MKTS/GLOB]

Asian shares on Thursday tracked a steep Wall Street selloff as investors fretted over rising global inflation, China’s zero-COVID policy and the Ukraine war. [MKTS/GLOB]

“Still, oil markets are keeping a bullish trend as a pending import ban by the European Union on Russian crude is expected to further tighten global supply,” Yoshida said.

The European Union this month proposed a new package of sanctions against Russia for its invasion of Ukraine. This would include a total ban on oil imports in six months’ time, but the measures have not yet been adopted, with Hungary being among the most vocal critics of the plan.

The European Commission unveiled on Wednesday a 210 billion euro ($220 billion) plan for Europe to end its reliance on Russian fossil fuels by 2027, and to use the pivot away from Moscow to quicken its transition to green energy.

Also, U.S. crude inventories fell last week, an unexpected drawdown, as refiners ramped up output in response to tight product inventories and near-record exports that have forced U.S. diesel and gasoline prices to record levels. [EIA/S]

Capacity use on both the East Coast and Gulf Coast was above 95%, putting those refineries close to their highest possible running rates.

In China, investors are closely watching plans in the country’s most populous city, Shanghai, to ease restrictions from June 1, which could lead to a rebound in oil demand at the world’s top crude importer.

Stephen Innes from SPI Asset Management said news that Shanghai planned to gradually resume inter-district public transport from May 22 was positive for risk and supporting oil prices.

($1 = 0.9537 euros)

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