OIL FALLS AFTER THREE-DAY RALLY
Oil prices fell on Friday after a three-day rally ran out of steam due to a stronger dollar, promising to notch up the oil market’s worst-performing quarter since 2015 as investors fret that growing US supplies are undermining OPEC-led cuts.
Brent crude futures LCOc1 have made the biggest losses across global asset classes this quarter. In March, the contracts posted the biggest monthly losses since July as growing U.S. crude inventories and drilling activity counterbalanced production cuts elsewhere in the world.
Brent futures were down 53 cents at $52.43 a barrel at 1023 GMT. The contracts have lost around 7 percent since the previous quarter, the worst quarterly losses since late 2015.
US crude futures CLc1 were down 36 cents at $49.99 a barrel, slipping back below $50. They too are on track to end the quarter around 7 percent lower, also the worst quarterly losses since late 2015.
Oil prices had gained momentum this week on a growing sense that OPEC and non-member Russia would extend their production cut, seeking to drive the market higher.
OPEC and non-OPEC producers including Russia agreed late last year to cut output by almost 1.8 million barrels per day in the first half of 2017 to rein in a global supply overhang and prop up prices.
PORTS IN CHINA HAVE ENOUGH IRON ORE TO BUILD 13,000 EIFFEL TOWERS
With enough iron ore to construct Paris’s Eiffel Tower nearly 13,000 times over, China’s ports are bursting with stockpiles of the raw material and some of them are demolishing old buildings to create more storage space, trading sources said.
China’s domestic iron ore production jumped 15.3 percent in January-February as a price rally last year extended into 2017, causing imported ore to pile up at the ports of the world’s top buyer. Stockpiles are at their highest in more than a decade and are affecting prices.
Inventory of imported iron ore at 46 Chinese ports reached 132.45 million tonnes on March 24, SteelHome consultancy said, the highest since it began tracking the data in 2004. A third of the stocks belongs to traders and the rest is owned by China’s steel mills.
That volume would make about 95 million tonnes of steel, enough to build 12,960 replicas of the 324-metre (1,063-foot) high Eiffel Tower in Paris.
Global iron ore prices are now at just above $80 a tonne from a 30-month peak of $94.86 reached in February, largely due to the growing port inventory.
Prices surged 81 percent last year, bringing relief to miners after a three-year rout. The rally stretched into 2017, inspiring marginal producers to resume business and lifting supply as China’s steel demand waned.
GOLD PRICES STAY LOWER
Gold prices fell on Wednesday in the Asian trade as positive economic data from the United States backed expectations of further interest rate hikes by the Federal Reserve this year, prompting the dollar to bounce back from multi-month lows.
Spot gold was down 0.2 percent at $1,248.60 per ounce, as of 0119 GMT. US gold futures slipped 0.6 percent to $1,248.2.
Reinforcing rate hike expectations, US consumer confidence index hit 125.6 in March, surpassing expectations for a reading of 114 and much higher than 116.1 in February. The March level marked the highest since December 2000.
US Federal Reserve Vice Chairman Stanley Fischer also gave the dollar a lift as he said in a television interview that two more increases to US overnight interest rates this year seemed “about right.”
Gold bullion investment will rise for the fourth straight year in 2017 as global political and economic factors are forecast to maintain buying interest, CPM Group said on Tuesday.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.21 percent to 833.51 tonnes on Tuesday.
PROJECT TO BOOST RWANDA MILK PRODUCTION
A six-year dairy development project has been launched amid concerns of value addition. The Rwanda Dairy Development Project (RDDP) was launched on Tuesday in Kigali by the Ministry of Agriculture, in a push to address challenges of diversification for dairy products.
The new initiative is expected to improve livelihoods of over 100,000 smallholder livestock farmers and open opportunities for other actors in the country’s dairy sector. The project worth $65.1 million (about Rwf53.6bn) will cover 12 districts; three in each province.
NATURAL GAS CONTRACT EXPIRES
April gas contract expired on last Thursday, up from March but down significantly from January. The $3.18 settle today was the highest settle that the April contract saw. Gas prices have hit their highest levels in nearly two months, as investors are betting that storage might not be able to keep up with summer demand.
A very bullish 150 Bcf withdrawal from storage was reported for the week ending March 17. Storage is now about 15 percent above the five-year average, with a strong 50 Bcf withdrawal expected to be reported tomorrow (for last week). Yet overall, end-of-season inventory will be a very high 2,040 Bcf or, about 15-17 percent higher than normal and should insulate prices in the near-term. Next week, expect a reported injection of 15-20 Bcf.
MALAYSIAN PALM OIL POSTS 2ND STRAIGHT GAIN
Malaysian palm oil futures rose for a second consecutive session on Wednesday, supported by strength in soyoil on the Chicago Board of Trade and a weaker ringgit. Benchmark palm oil futures for June delivery on the Bursa Malaysia Derivatives Exchange rose 0.5 percent to 2,721 ringgit ($616.03) a tonne at the end of the trading day.
Traded volumes stood at 50,006 lots of 25 tones each in the evening. A weaker ringgit and a rebound in the Chicago Board of Trade overnight supported a recovery in palm oil, but it lacks bullish news to support a strong rally.
COCOA FUTURES SLIP
Cocoa futures fell on Wednesday amid weaker technicals and enduring worries about ample supplies, while raw sugar fell as bearish chart signals weighed on prices.
May New York cocoa had lost $29, or 1.36 percent, to $2,100 a tonne by 1113 GMT in low volume, while May London cocoa was down 18 pounds, or 1.05 percent, at 1,690 pounds a tone.
Experts noted technical were weaker, after both markets lost ground in the previous session and closed below the short-term moving averages.
JAPAN’S NEW ALUMINUM PREMIUM PRICE SET
Japan’s aluminum premium for shipments during the April to June quarter has been set at $128 per tone, up about a third from the quarter before due to higher overseas prices, five sources directly involved in the pricing talks said on Wednesday.
Japan is Asia’s biggest importer of aluminum and the premiums, which consumers pay to producers on top of the London Metal Exchange cash price for primary metal shipments, set the benchmark for the region.
The new premium is 35 percent higher than the $95 per tonne premium in the previous quarter and is the second quarterly increase in a row and the highest in two years.