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.
Photo: AP
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.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
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