Star commodity performer oil surged in value this week on hopes that easing US shale output could help curb the stubborn global supply glut, analysts said.
“Oil prices rose sharply in the past week, supported by further evidence that US production and crude stocks are close to peaking ? if they have not done so already,” said Julian Jessop, head of commodities research at consultancy Capital Economics.
“The recent stability of the US dollar has also helped sentiment towards commodities more generally,” he said.
Oil prices have fallen as much as 50 percent since the middle of last year on the back of copious global supplies and weak demand.
OIL: Crude futures rallied on signs that US shale oil production may be on the cusp of easing. OPEC predicted that US crude production would fall in the final half of the year, reducing the global oversupply.
“Higher global refinery runs, driven by increased seasonal demand, along with the improvement in refinery margins, are likely to increase demand for crude oil over the coming months,” OPEC said in its monthly oil market report.
“Given expectations for lower US crude oil production in the second half of the year, these higher refinery needs will be partially met by crude oil stocks, reducing the current overhang in inventories.”
Carl Larry, an analyst at Frost & Sullivan, said that the market appeared to be trending higher, which could bring prices back up to the US$65 to US$70 range, thanks to a rebalancing of supply and demand.
“We’re starting to see refineries run higher,” Larry said. “We have a lot of refining season to go — we just got started — we are going to start seeing more drawdown in crude, we are going to start seeing production start to tip off.”
Prices diverged on Friday as traders locked in profits following a six-day rally.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in June rallied to US$64 a barrel from US$56.84 for the May contract the previous week. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for May leapt to US$56.12 compared with US$50.80.
PRECIOUS METALS: Gold rose as uncertainty over Greece’s potential eurozone exit sent investors into the safe-haven commodity.
“Escalating worries that Greece will default on its debt and the ultimate decision surrounding its inclusion in the eurozone have helped squeeze gold higher as the precious metal once again breaks above the US$1,200 level,” IG analyst Alistair McCaig said.
By Friday on the London Bullion Market, the price of gold climbed to US$1,203.35 an ounce from US$1,182.75 the previous week.
Silver firmed to US$16.36 an ounce from US$16.30.
On the London Platinum and Palladium Market, platinum dipped to US$1,161 an ounce from US$1,205.
Palladium was unchanged at US$777 an ounce.
BASE METALS: Base or industrial metals diverged, but tin slumped on oversupply fears.
“The tin price has fallen [to] its lowest level since September 2009,” Commerzbank analysts said.
The sharp drop was “due to fears of an oversupplied market after China scaled up its production in the first quarter and because significantly more tin is reaching the market.
“The downward movement is likely to have been exacerbated by sell orders from speculative financial investors,” Commerzbank said.
By Friday on the London Metal Exchange, copper for delivery in three months rose to US$6,079 a tonne from US$6,025.50 the previous week.
Three-month aluminum advanced to US$1,837 a tonne from US$1,766.50.
Three-month lead increased to US$2,043.50 a tonne from US$1,998.50.
Three-month tin tumbled to US$15,100 a tonne from US$16,570.
Three-month nickel increased to US$12,745 a tonne from US$12,680.
Three-month zinc edged higher to US$2,223 a tonne from US$2,203.50.
SUGAR: Prices recovered further from the commodity’s recent slide close to six-year lows.
By Friday on LIFFE, London’s futures exchange, a tonne of white sugar for delivery in August gained to US$375.10 from US$366.10 a week earlier.
On ICE Futures US, unrefined sugar for July increased to US$0.1322 a pound (0.45kg) from US$0.1245.
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