World oil prices recovered further this week, extending a recent fightback thanks to a falling US dollar and agreement by producers to meet next month to discuss a global supply glut.
Crude futures rallied for a third day running on Friday before giving way to some profit-taking, while traders brushed aside news of a rocket attack by militants on a gas plant in OPEC producer Algeria.
However, they had fallen on Monday and Tuesday on fading hopes of a meeting between producers and renewed concerns over slowing growth in China, the world’s second-biggest economy, dealers said.
“Oil prices are on the verge of closing higher for the fifth straight week,” said Fawad Razaqzada, analyst at City Index trading group.
At about 5:15pm, US benchmark West Texas Intermediate (WTI) for delivery in April was down US$0.53 to US$39.67 a barrel.
Brent North Sea crude for May delivery dropped US$0.40 to US$41.14 a barrel compared with Thursday’s close.
However, both contracts were up over the week, while WTI had advanced 4.5 percent on Thursday, closing above US$40 for the first time since the start of December.
With confidence growing that the world’s biggest crude producers will hammer out a deal to curb output, investors have piled back into the commodity in recent weeks after they toyed with 13-year lows last month.
Qatari Energy Minister Mohammed al-Sada confirmed this week that exporters from within and outside the OPEC cartel would meet on April 17 in Doha, stoking hopes of an agreement to ease the glut.
“Crude oil has found support from growing optimism that key OPEC and non-OPEC producers will agree a deal to freeze production,” Inenco energy consultants said in a note to clients on Friday.
Buying in recent days has been fueled also by the US Federal Reserve, which on Wednesday halved its forecast for US interest rate hikes this year. The announcement sent the dollar sliding, which in turn makes oil cheaper for holders of rival currencies.
“Commodities have benefited in the past week from a continued improvement in investor sentiment, helped by a relatively dovish statement from the US central bank which weakened the dollar,” Capital Economists analyst Caroline Bain said.
NO HAVEN
Gold futures had a fifth loss in six sessions as gains in equities reduced demand for the metal as a haven.
A gauge of global stocks touched the highest since early January, while the S&P 500 Index rallied to erase losses incurred during the worst-ever start to a year.
Gold, posting a second straight weekly decline that trimmed this year’s rally to 18 percent, is still the best performer among 22 raw materials on the Bloomberg Commodity Index, topping gains in US Treasuries, the dollar, equities and high-yield and investment-grade corporate bonds this year. The metal has advanced as investors sought shelter from turbulent financial markets and weakening economies.
“Equities are firmer on the day, and that’s driving safe haven demand away from precious metals,” David Meger, director of metals trading at High Ridge Futures in Chicago, said in a telephone interview. “We saw a very extended move on gold, so consider this profit-taking or a retracement after the aggressive move to the upside.”
Gold futures for April delivery slipped 0.8 percent to settle at US$1,254.30 an ounce at 1:47pm on the Comex in New York, following Thursday’s 2.9 percent gain that came after the Fed signaled a slower pace of interest-rate increases. Lower rates makes gold more competitive against interest-bearing bonds and equities that offer dividends.
Silver futures also fell on the Comex, as palladium and platinum slipped on the New York Mercantile Exchange.
HIGH INVENTORY
Copper fell from a four-month high after a report showing record inventories in Shanghai rekindled demand concerns in China, the world’s biggest user of the metal.
Stockpiles monitored by the Shanghai Futures Exchange rose 13 percent to 394,777 tonnes this week, according to data released by the bourse on Friday. The supplies have more than doubled this year.
The Shanghai inventory data “suggests that copper demand in China is subdued at present,” Commerzbank AG analysts, including Daniel Briesemann, wrote in a note on Friday. “If China turns out to have imported large quantities of copper in March, this will presumably not be attributable to real demand.”
Copper for delivery in three months fell 0.5 percent to settle at US$5,042 a tonne at 5:51pm on the London Metal Exchange. Prices have risen 7.2 percent this year.
Aluminum, lead, nickel and tin also fell in London, while zinc gained. Copper declined on the Comex in New York.
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