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Oil prices post fourth consecutive weekly gain

Oil prices rose to the fourth consecutive weekly gain on Friday, steadying at three-month highs after new data showed U.S. crude inventories fell far more than expected, while upbeat economic data and optimism over a US-China trade deal fueled a year-end stock market rally.

Brent crude LCOc1 rose 24 cents to settle at $68.16 a barrel, the highest since mid-September. The international benchmark has climbed nearly 27% since the end of 2018.

West Texas Intermediate CLc1 rose 4 cents to settle at $61.72 a barrel, another three-month high. The US benchmark has risen 36% so far this year.

US crude stocks fell by 5.5 million barrels in the week to Dec. 20 to 441.4 million barrels, according to the Energy Information Administration, far exceeding analysts’ expectations of a 1.7 million-barrel drop.

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China iron ore futures hit over 2-week low in sluggish trade

Benchmark Dalian iron ore prices fell to their lowest in more than two weeks on Thursday, with market activity winding down ahead of the New Year holiday next week. Dalian Commodity Exchange’s most-traded iron ore contract , with May 2020 expiry, fell as much as 2percent to 628.50 yuan ($89.85) a tonne in early trade, its weakest since Dec. 9. It was down 1.1percent by 0252 GMT.

On the Singapore Exchange, the front-month January contract slipped 1.5percent to $88.65 a tonne.

“There’s not much activity from steel mills this week. We may see prices heading further southwards ahead of the New Year holiday,” a Shanghai-based trader said. Weak demand for the steelmaking raw material also weighed on prices, with heavy-pollution alerts in some of China’s steel production hubs prompting mills to limit operations, and margins coming under pressure after peaking earlier this month.

Gold prices move higher

Gold edged higher on Friday and was set for its best week in more than four months, as volumes remained thin in cautious holiday trade, supported by global economic growth concerns and US-China trade uncertainties.

Spot gold was up 0.1% at $1,513.36 per ounce in New York close, having risen to a near two-month high of $1.515.09 in the session. It has gained over 2% so far this week, the most since the week ended Aug. 9.

US gold futures settled 0.2% higher at $1,518.10 per ounce.

Elsewhere, silver eased 0.3% to $17.84 an ounce. It was up nearly 4% for the week, extending gains into a third week.

Platinum edged 0.1% higher to $947.58 an ounce, while palladium gained 0.3% to $1,905.

 

Hit by climate change, agriculture continues to suffer

Sounding cautious, Pakistan-based economists had dismissed a further slowdown in the national economy months ago, expecting that better water availability would lend much-needed support to the agriculture sector – a key component of the economy.

However, a massive surge in fertiliser prices, impact of climate change and locust attack played havoc with the optimism. These factors are set to turn the economists’ little doubt into a major worry.

“A study suggests that the agriculture sector performance has continued to decline for the past 19 years. The sector is feared to continue the downward trend in the 20th straight year – FY20,” Sindh Abadgar Board (SAB) Senior Vice President Mahmood Nawaz Shah quoted as saying to the Pakistan daily..

The share of agriculture sector – crops and livestock – in the gross domestic product (GDP) was around 21-22percent in recent years. “It (agriculture sector) may hardly retain a share of 18-19percent in GDP this year (FY20),” said Agri Forum Pakistan Chairman Ibrahim Mughal.

Acute shortage of water did not let the agriculture sector perform well last year – FY19. This year, the availability of water was not an issue but a “massive increase in fertiliser (urea and DAP) prices by up to 25percent has badly hit agricultural (crops) output as high prices discouraged farmers from using a good quantity of fertiliser.”

Brazil breaks key oil production milestone

Brazil’s crude oil production in November topped 3 million barrels per day for the first time ever, the National Petroleum Agency reported, adding that total oil and gas production rose to 3.95 million barrels of oil equivalent daily – also a record-breaking figure.

The strong output result came on the back of ongoing ramp-up of production at eight new floating production, storage, and offloading facilities, S&P Global Platts reports, citing ANP data. The ramp-up added more than 100,000 bpd to the country’s total production between October and November. The annual increase in production exceeded 20 percent.

The presalt zone has become the main contributor to growth in Brazil’s crude oil production. In fact, it accounts for about two-thirds of the country’s November total, at 2.061 million bpd. The biggest producing field, Lula, is in the presalt zone. It produced 1.063 million bpd of crude last month. The second and the third-largest producing fields were also in the presalt zone, which has garnered significant attention from supermajors as the next hot spot for oil production growth.

Natural gas production headed for a slow-down in 2020

The region’s Marcellus and Utica shale gas producers had a banner year in 2019. Pennsylvania, Ohio and West Virginia together accounted for one-third of the nation’s natural gas production. But a likely slow-down is ahead in 2020.

Marcellus and Utica shale drillers produced 30 billion cubic feet of gas in 2019. The increased supply has driven down prices to about $2 per million British thermal units. Compare that to the previous decade, when gas was selling at about $8 per million Btu.

Penn State geologist Terry Engelder first reported on the abundance of shale gas in 2008.

“These companies made their investments, anticipating six- to eight- to 10-dollar gas,” Engelder said. “No one ever dreamed it would stabilize at two-dollar gas. There’s just so much of it, particularly here in Pennsylvania, that the companies can’t sell it.”

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