Oil retreats on US output rise after hitting near 2-year high
Oil prices fell on Friday, dropping from highs last seen in 2015, as soaring US production undermined a 10 percent rally from December lows that was driven by tightening supply and political tensions in OPEC member Iran.
Rising US output and weaker refined products demand weighed on the market, traders said.
Traders said political tensions in Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), had pushed prices higher.
West Texas Intermediate crude CLc1 futures fell 57 cents to settle at $61.44 a barrel. WTI hit $62.21 the previous day, which was its strongest price since May 2015. Brent crude LCOc1 futures for March delivery fell 45 cents, or 0.7 percent, to $67.62 a barrel. The previous day it touched $68.27, also the highest price since May 2015.
Oil prices have received general support from production cuts led by OPEC and Russia, which started in January last year and are set to last through 2018, as well as from strong economic growth and financial markets. That has helped to tighten markets. U.S. commercial crude inventories C-STK-T-EIA fell by 7.4 million barrels in the week to Dec. 29, to 424.5 million barrels, according to data from the Energy Information Administration. That is down 20 percent from peaks last March and close to the five-year average of 420 million barrels.
Yet, surging US production could offset some of the cuts from OPEC producers, as it rose to 9.78 million barrels per day (bpd) in the latest week, according to Wednesday’s report.
Gold slips from 3-1/2 month peak as dollar edges higher
Gold eased from an earlier 3-1/2 month high on Wednesday and was on track for its first day of losses in nearly three weeks as a firmer dollar pressured assets priced in the US currency. The dollar’s late December retreat had driven gold sharply higher, leading to fears that the metal was becoming overbought.
Spot gold was down 0.1 percent at $1,316.93 an ounce at 1430 GMT on Wednesday, off an earlier peak of $1,321.33. The dollar rose 0.3 percent against the euro in early trade, though it remained near a four-month low after declining nearly 3 percent in the past three weeks. Investors are awaiting manufacturing data and minutes of a December US Federal Reserve meeting due later in the day, which will be closely watched for clues on the outlook for US monetary policy.
Wheat eases after 2-session rally, market eyes us weather
Chicago wheat futures edged lower on Thursday, easing from a one-month high touched in the previous session, with focus on adverse weather across a key US producing region which could reduce yields.
Soybeans dipped after gaining for the last two sessions while corn was largely unchanged. The most-active wheat contract on the Chicago Board Of Trade gave up 0.4 percent to $4.34-1/4 a bushel by 0348 GMT after hitting its highest since Dec. 4 at $4.37 a bushel on Wednesday. Soybeans fell 0.1 percent to $9.67-1/2 a bushel, having firmed 0.4 percent on Wednesday and corn was unchanged at $3.53 a bushel. The wheat market has drawn support amid sub-zero temperatures across the US Plains and as forecasts for continued dryness raised the prospect of a reduced harvest.
Palm hits one-month high
Malaysian palm oil futures rose to their highest in one month in early trade on Wednesday, supported by related edible oils and on expectations of stronger demand in the coming weeks.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was up 1.1 percent at 2,560 ringgit ($636.18) a tone at the midday break. It earlier hit 2,573 ringgit, its strongest level since Dec. 5. Trading volumes stood at 30,298 lots of 25 tons each. Palm oil prices track the performance of other edible oils, as they compete for a share in the global vegetable oils market. The March soybean oil contract on the Chicago Board of Trade saw overnight gains of 0.9 percent, and was last up slightly by 0.2 percent on Wednesday.
Deficits on the horizon drive zinc to 10-year peak
Zinc rose to 10-year highs on Tuesday as the market focused on looming deficits due to falling supplies, but gains were capped as prices are at levels which are likely to encourage investment in new output.
Benchmark zinc rose 0.9 percent to $3,350.50 a tonne in official rings, its highest since August 2007, before the financial crisis hit demand for the metal used to galvanise steel. Demand growth is decent, but not spectactular from a historical perspective, which tells me this is once again a supply side issue, said Bernstein analyst Paul Gait.
US cash grains-corn bids firm; soybeans mostly flat
Spot basis bids for corn firmed at interior elevators, processors and ethanol plants around the US Midwest early on Wednesday amid slow sales of the yellow grain, dealers said. River bids for corn held steady. Soybean bids were mostly flat at interior locations but mixed at river terminals.
Although the interior soybean basis was mostly steady, bids rose by 4 cents per bushel in Cincinnati, Ohio. Soybean sales were light in areas east of the Mississippi River but a dealer in Council Bluffs, Iowa, reported some farmer interest in booking deals.
Coffee edges up, sugar retreats from five-week high
Arabica coffee futures on ICE edged up on Wednesday as the market extended its recent advance while raw sugar prices fell back after rising to their highest level since late November. March arabica coffee was up 0.35 cents, or 0.3 percent, at $1.3055 per lb by 1440 GMT, edging towards the previous session’s 2-1/2 month high of $1.3065. Dealers said the market was on track for a sixth consecutive session of gains. The run-up in prices has been driven by fund short-covering against the backdrop of lower exports from Brazil and the potential for the next crop in the world’s top producer to be smaller than previously expected.
Bangladesh tea prices rises on strong winter demand
Tea prices in Bangladesh rose at the weekly auction for the second time in a row, thanks to strong winter demand and tight supplies. Bangladeshi tea fetched an average price of 238.25 taka ($2.80) per kg at the auction held on Tuesday, compared with a revised price of 236.80 taka at the previous sale, National Brokers said.
There was strong demand as buyers wanted to stock up for the winter, while supplies were lower than last week, a National Brokers official said. Demand for tea in Bangladesh usually rises in winter. However, about 19 percent of the 2.27 million kg offered at the sole auction centre in Chittagong was unsold, compared with 15 percent unsold of the 2.62 million kg offered in the previous auction. Bangladesh’s tea production jumped nearly 27 percent in 2016 to a record 85 million kg, helped by favourable weather conditions, making imports a choice not a necessity.