World oil prices finished modestly lower on Thursday as concerns about oversupply offset news of a drop in the US rig count.
US benchmark West Texas Intermediate (WTI) for May delivery dipped US$0.33 to US$39.46 a barrel on the New York Mercantile Exchange.
Brent North Sea oil for May delivery slipped US$0.03 to US$40.44 a barrel in London.
The WTI price had earlier dropped below US$39 a barrel, still pressured by Wednesday’s official report that showed US crude reserves jumped a huge 9.4 million barrels last week.
However, prices rebounded after the Baker Hughes rig count released on Thursday showed a drop of 15 oil rigs active in the US for this week.
The decline in rigs “gave some support to the market in spite of the terrible EIA [US Energy Information Administration] inventory report,” said Andy Lipow, a Houston petroleum industry consultant. “The market is trying to recover, but it is going to remain weighed down with the high inventory levels and really without any concrete action out of OPEC and non-OPEC producers [to cut output].”
“That huge build in crude inventories really suggests that ... the overall supply situation remains imbalanced,” CMC Markets strategist Michael McCarthy said. “These are big numbers and the market cannot just shrug that sort of thing off.”
PRECIOUS METALS: Gold’s 30-day historical volatility fell to its lowest since Feb. 10 and open interest slipped from its highest since September 2011. Since March 7, gold futures managed to post gains only three times. The Bloomberg Dollar Index rose for a fifth straight session, the longest streak in two months, reducing the appeal of US dollar-denominated commodities.
Bullion has rallied 15 percent this year, the best performance among 22 raw materials on the Bloomberg Commodity Index, topping gains in Treasuries, the US dollar, equities and high-yield and investment-grade corporate bonds, as investors sought a haven amid financial turmoil that the US Federal Reserve said was among the risks to the US economy.
Traders were weighing US economic reports and comments from the Fed that they might raise interest rates in the next few months.
“The market is definitely confused as to the time frame in which to expect these rate hikes,” said Tim Evans, the chief market strategist at Long Leaf Trading Group in Chicago. “The labor market has been performing relatively well. However, the broader economic trends are not as strong and it leaves the market very uncertain” on the outlook for the rate path and the investment demand for gold, he said.
Gold futures for June delivery fell 0.2 percent to settle at US$1,223.50 an ounce at 1:45pm on the Comex in New York, posting a 2.5 percent loss this week, the worst for a most-active contract since Nov. 6 last year.
Silver futures fell 0.5 percent on the Comex, while palladium and platinum futures declined on the New York Mercantile Exchange. A Bloomberg Intelligence index of 14 senior gold miners recovered some of the ground lost in a 5.8 percent plunge on Wednesday.
BASE METALS: Zinc paced industrial metal declines as falling US durable goods orders dimmed demand prospects and a Federal Open Markets Committee member said interest rates might have to be increased faster.
Mining shares headed for the biggest weekly decline since January, with Teck Resources Ltd and Freeport-McMoRan Inc each losing more than 10 percent. The US dollar extended a rally amid renewed expectations for monetary tightening, making metals denominated in the US currency more expensive for foreign buyers.
On Wednesday, US Federal Reserve Bank of St Louis President James Bullard joined a growing chorus of policymakers saying rates might rise as soon as next month.
“The US had a pretty lousy durable goods number,” Toronto-Dominion Bank analyst Bart Melek said. “At a time where the market is telling you the Fed may be tightening, this could be a negative for global growth. I might need less zinc.”
Zinc, used to keep steel from rusting, fell for a third day, sliding 2.1 percent to US$1,798 a tonne at 12:45pm in New York. The metal gained 2.3 percent last week.
Lead, copper, tin and nickel also retreated. Aluminum was little changed.
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