Sun, May 29, 2016 - Page 15 News List

Oil trims third week of gains, gold weak on strong US dollar

Bloomberg

Oil trimmed its third weekly advance as Canadian energy producers moved to resume operations after wildfires eased.

Futures slipped 0.3 percent in New York. Suncor Energy Inc is seeking to return most of its workers by next week and begin startup of oil-sands facilities that were shut down by forest fires, according to people with knowledge of the matter. Prices climbed above US$50 a barrel on Thursday as declining US crude supplies eroded a global glut.

“Finally supply and demand are coming into balance,” said Mark Watkins, the Park City, Utah-based regional investment manager for The Private Client Group of US Bank. “There are going to be headwinds as you near the US$50-US$60 range. Inventories are still high and we have to work them off.”

Oil has surged more than 85 percent in New York since touching a 12-year low in February on signs the worldwide surplus will ease amid declining production in Nigeria, Libya, Canada and the US. OPEC is unlikely to reach any agreement to limit output when it meets on Thursday, as the group sticks with Saudi Arabia’s strategy of squeezing out rivals, according to analysts surveyed by Bloomberg.

West Texas Intermediate (WTI) for July delivery dropped US$0.15 to close at US$49.33 a barrel on the New York Mercantile Exchange. Front-month WTI climbed 3.3 percent this week. Futures touched US$50.21 on Thursday, the highest since Oct. 9. Total volume traded was 43 percent below the 100-day average at 2:45pm.

Brent for July settlement decreased US$0.27, or 0.5 percent, to US$49.32 a barrel on the London-based ICE Futures Europe exchange. Futures rose 1.2 percent this week. The contract reached US$50.51 during trading on Thursday, the highest since Nov. 4. The global benchmark closed at a US$0.01 discount to WTI.

Meanwhile, gold is looking very different than it did at the beginning of this month. Along with platinum, palladium and silver, it is heading for the biggest monthly loss since November last year as investors anticipate higher borrowing costs in the US.

Bullion has pared this year’s rally after retreating more than 5 percent this month as the US dollar rallied and investors raised bets on the US Federal Reserve increasing interest rates as early as next month. Higher rates curb gold’s appeal against interest-bearing assets. US Fed Chair Janet Yellen spoke on Friday at Harvard University, saying an increase in rates in the coming months might be appropriate. The comments come after a number of regional Fed presidents have indicated their willingness to tighten policy.

Gold futures for August delivery dropped 0.5 percent to settle at US$1,216.70 an ounce at 1:47pm on the COMEX in New York. The metal is down 5.7 percent this month.

Holdings in gold-backed exchange-traded funds added 1.5 tonnes to 1,844.9 tonnes as of Thursday, data compiled by Bloomberg show. Silver futures for July delivery dropped 0.5 percent to US$16.269 an ounce on the COMEX. On the New York Mercantile Exchange, platinum and palladium declined.

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