Sun, Nov 08, 2015 - Page 15 News List

Oil prices hit reverse as dollar jumps on US data


Oil prices sank for the third straight session on Friday after a bullish US jobs market report sent the US dollar sharply higher.

US benchmark West Texas Intermediate for delivery in December fell US$0.91 to US$44.29 per barrel from Thursday. In London trade, Brent North Sea crude for December shed US$0.56 to stand at US$47.42 per barrel.

Crude prices sank after the US released a surprisingly strong jobs report for last month that showed the economy still growing at a firm rate, with the unemployment rate falling to 5 percent on the back of 271,000 new jobs created, nearly double the number in September.

That triggered higher expectations that the US Federal Reserve will increase interest rates next month, in turn pushing the greenback up 1.2 percent against the euro and 1.1 percent against the yen to cap a week of strong gains.

With crude oil prices in dollars, its rise crimps the buying power of those using other currencies.

“The market was already figuring we are going to have a rate increase, the numbers only supported that feeling,” Andy Lipow of Lipow Oil Associates said.

Another fall in the Baker Hughes North American rig count did little to shore up prices. The count, which gauges drilling activity in the US and Canada, fell in the week to 956 rigs, down 10 from a week earlier and 1,379 fewer than a year ago.

Meanwhile the US officially rejected the Keystone XL pipeline project intended to pipe more crude from Canada’s tar sands south towards Gulf of Mexico refiners.

The rejection was not a surprise after years of delay, but nevertheless sent the share price of pipeline owner TransCanada down 4.6 percent.

GOLD: A “pretty darn strong” US employment report is pretty darn bad for gold.

Bullion posted the biggest weekly drop in a year after payrolls surged and wage growth accelerated last month, boosting the case for the Federal Reserve to raise interest rates.

Higher rates cut the appeal of the metal because it does not pay interest or give returns like assets such as bonds or equities.

“The Fed is determined to move, and now they have fuel to do it,” New York-based ETF Securities US director of research Mike McGlone said in a telephone interview. “That number was pretty darn strong, and there’s not much we can do about it. Higher yields, a strong dollar and Fed tightening are all bad for gold.”

Gold futures for delivery next month fell 1.5 percent to settle at US$1,087.70 an ounce at 1:30pm on the Comex in New York. Prices slid 4.7 percent this week, the biggest such loss since Oct. 31 last year.

BASE METALS: Copper sank this week on the strong dollar and demand concerns arising from weak Chinese and German data, despite production cutbacks.

Many commodities took a hit from the soaring dollar as the US Federal Reserve appeared to move closer to a December interest rate hike.

Copper on Friday tumbled to US$4,981 per tonne — its lowest point since late September.

The metal has also fallen heavily this week despite news of slashed production from Swiss mining giant Glencore PLC.

By Friday on the London Metal Exchange, copper for delivery in three months stood at US$5,012 a tonne from US$5,119 a week earlier.

In contrast, aluminum pushed higher following output cuts from US giant Alcoa Inc.

Three-month aluminum rose to US$1,511 a tonne from US$1,476.

Three-month lead dipped to US$1,663 a tonne from US$1,698.

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