Oil on Friday dropped to the lowest close in more than two months, as the US heads to the end of the summer-driving season with ample inventories.
Futures fell 1.3 percent in New York. US crude and gasoline supplies are at the highest seasonal levels in at least two decades, government data show. Record demand last month for the fuel was not enough to make a dent in stockpiles that ended the month at the highest since 1984 for this time of year, the American Petroleum Institute said. The summer driving season ends on Sept. 5, Labor Day.
Oil also slipped as the US dollar rose to a more than seven-week high.
Oil has fluctuated between about US$44 and US$52 a barrel since early last month after almost doubling from a 12-year low in February, as supply disruptions from Nigeria to Canada and falling US output trim a global surplus.
While US crude stockpiles slid for a record ninth week through July 15, they still remain more than 100 million barrels above the five-year average.
“The bullish sentiment that pushed oil above US$50 has evaporated,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut. “We have massive crude inventories and more than ample fuel stockpiles as we near the end of the summer driving season.”
West Texas Intermediate for September delivery fell US$0.56 to settle at US$44.19 a barrel on the New York Mercantile Exchange. It is the lowest close since May 9. Prices declined 3.8 percent this week. Total volume traded was 35 percent below the 100-day average at 2:45 p.m.
Brent for September settlement dropped 1.1 percent to US$45.69 a barrel on the London-based ICE Futures Europe exchange. Prices slipped 4 percent this week. The global benchmark closed at a US$1.50 premium to WTI.
Meanwhile, gold headed for its first back-to-back weekly decline since May, as gains in equity markets and the US dollar sapped demand for the metal as a store of value.
Gold has pared this year’s rally as traders begin to price in increasing odds of a US rate increase this year. Higher borrowing costs reduce the appeal of precious metals because they do not offer yields. US Federal Reserve policymakers are to meet next week.
“With continued equities strength and some additional dollar strength, we saw traders book profits in precious metals, mainly gold and silver,” Phil Streible, a senior commodity strategist at RJO Futures in Chicago, said in a telephone interview. “People are starting to think that thoughts of an interest rate hike in the US are working their way back into some of the Fed officials’ talks.”
Bullion for immediate delivery fell 0.6 percent to US$1,323 an ounce at 1:54pm in New York, set for a 1.1 percent loss this week, according to Bloomberg generic pricing.
Gold futures for August delivery slipped 0.6 percent to settle at US$1,323.40. Spot silver was set for the biggest weekly drop in two months.
AngloGold Ashanti Ltd said it returned to profit in the first half thanks to higher prices, cost control and weaker currencies in countries where it operates. Its shares rose as much as 3.4 percent and have almost tripled this year.
Holdings in gold-backed exchange-traded funds fell 1.05 tonnes to 2,004.4 tonnes on Thursday, data compiled by Bloomberg show.
Spot platinum slipped. Palladium is set for a fifth straight weekly advance, the longest since October.
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