Oil prices rebounded on Friday after the International Energy Agency (IEA) said that after the market’s long rout, there were signs prices might have “bottomed out.”
US benchmark West Texas Intermediate (WTI) for delivery next month rose US$0.66 to US$38.50 per barrel on the New York Mercantile Exchange.
In London, Brent North Sea crude for May delivery, the European benchmark, rose to US$40.39 per barrel, up US$0.34 from Thursday’s settlement.
Photo: AP
“The market is gravitating to the idea we are going to see some tightening of the supply and demand fundamentals,” Gene McGillian of Tradition Energy said.
The notion, which emerged last month amid discussions about freezing output led by Saudi Arabia and Russia, picked up steam from the IEA’s new market report on Friday.
After a 20-month rout that has shaved prices more than 60 percent since mid-2014, a tentative recovery is underway, it suggested.
“International crude oil prices have recovered remarkably in recent weeks,” the IEA report said. “This should not, however, be taken as a definitive sign that the worst is necessarily over. Even so, there are signs that prices might have bottomed out.”
The IEA said the Saudi-Russian effort to gather producers behind an output freeze was a “first stab at coordinated action that is intended to stabilize prices,” with the presumed aim of pushing oil up to US$50 per barrel.
However, the IEA predicted there was a long way to go before oil supply and demand find a real balance, probably next year.
PRECIOUS METALS: Gold fell from a one-year high as a rally in global equities cut demand for the metal as a store of value.
Riskier assets from stocks to commodities and emerging-market currencies surged as investors reassessed European Central Bank (ECB) President Mario Draghi’s economic stimulus measures.
Gold and currency markets were whipsawed on Thursday when Draghi said after the plan was announced that he did not see any need to cut interest rates further.
Bullion rose 19 percent this year as concerns about global growth and a decline in US stocks boosted the metal’s appeal as a haven. Investors see a 77 percent chance the US Federal Reserve would raise interest rates by the end of the year, up from 68 percent a week ago, according to Fed-fund futures. Higher rates reduce the appeal of gold, which does not pay interest or offer returns like assets such as bonds or equities.
“Right now, with global stocks advancing, we are seeing a little bit of profit-taking in gold,” said Fain Shaffer, the president of Infinity Trading Corp in Indianapolis. “Any positive for the stock market seems to be a negative for gold.”
Gold futures for next month delivery declined 1.1 percent to settle at US$1,259.40 per ounce at 1:46pm on the Comex in New York, the fourth decline in five days. Spot silver fell 0.3 percent, while palladium added 0.5 percent and platinum 0.2 percent.
BASE METALS: Industrial metals and mining stocks rallied as investor optimism spread across global markets in the wake of the ECB’s announcement that it plans more economic stimulus.
Copper, zinc and lead paced gains in London, climbing at least 1 percent. Equities and crude oil advanced as investors embraced the ECB measures announced by Draghi. Metal prices also got a boost after China strengthened the yuan’s fixing by the most in four months.
Global markets retreated on Thursday as investors looked past an unprecedented boost to European monetary policy, focusing on rising anxiety that policymakers had lost the ability to jump-start global growth and stave off deflation.
“These statements have little nuances here and there, and sometimes you have to read them 43 times before you get whats really being said,” said Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. “Draghi did not rule out additional accommodation and that also creates some indication the European economy may not be as bad as people think it is, and that spilled into the copper market.”
Copper for delivery in three months climbed 1.6 percent to settle at US$4,970 per tonne at 5:50pm on the London Metal Exchange. Lead, nickel, tin, zinc and aluminum also gained. In New York, copper futures for May delivery advanced on the Comex.
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