Oil and gold lost ground, but copper and sugar enjoyed better weeks as the US dollar rose on Friday ahead of this week’s meeting of the US Federal Reserve and the Bank of Japan.
The meetings of both central banks are considered capable of influencing markets – the Fed for whatever it decides (a rate rise would be a big shock) and the Bank of Japan if it decides to expand its already massive spending program.
As a result oil futures settled at month-long lows on Friday and in the process suffered sharp loss for the week as traders braced for the two central bank decisions and an expected increase in oil exports from Libya and Nigeria.
In New York, October West Texas Intermediate crude futures lost 88 cents, or 2%, to settle at $US43.03 a barrel on Friday night, our time.
That was the lowest settlement since August 10 and the meant the key US oil contract lost 6.2% over the week.
In London, November Brent crude dropped 82 cents, or 1.8%, to end at $US45.77 a barrel. That was its lowest finish in a month and represented a loss of 4.7% for the week.
According to media reports, Nigeria and Libya are both preparing to boost their oil exports after months of weak performance.
Shell and Exxon Mobil have both lifted force majeure on Nigerian exports after militants had caused the shut-in of supply, while Libya’s state oil company lifted restrictions on sales from three ports on Wednesday.
The news on the two OPEC producers came around a week ahead of an informal meeting of major oil producers on the sidelines of an energy forum in Algeria set for September 26-28. That is expected to see some attempt to freeze output by OPEC member countries to try and boost prices.
But according to US analysts, Friday’s fall and that of last week is a negative for any deal.
Friday’s decline “indicates that expectations of a deal between OPEC member countries and Russia. are already low and falling fast,” said Colin Cieszynski, chief market strategist at CMC Markets, according to Marketwatch.com. “Uncertainty over the outlook for U.S., Chinese and global demand also continues to drive swings in energy markets,” he added.
And Libya made it clear that it would not be freezing production in a statement issued at the weekend.
On top of that the latest report from Baker Hughes showed that the number of active US oil rigs, which serves as proxy for production activity, climbed by 2 to 416 rigs. That is the 11th increase for the count in 12 weeks and the count is now 100 rigs higher than the bottom in late May and early June.
Gold futures also fell, finishing at their lowest level in almost three months on Friday.
It was the seventh fall in eight sessions and the contract ended the week with a near 2% loss as the greenback firmed ahead of the two central bank policy meetings this week.
The August Consumer Price Inflation report showing a 0.2% rise in the month (but only an annual 1.1% in the year to August) muddied the outlook for interest rates ahead of separate meetings of the Fed and the Bank of Japan.
Comex December gold fell $US7.80, or 0.6%, to $US1,310.20 an ounce, the lowest settlement since June 23 and a loss of 1.8% for the week.
Comex December silver dropped 17.9 cents, or 0.9%, to $US18.862 an ounce, down around 2.6% for the week.
And December copper ended nearly flat at $US2.16 a pound, but was up 3.2% for the week, suddenly stronger on the back of better economic news from China, the major customer for the metal.
Global sugar futures jumped almost 4% to a near four-year high on Friday as traders ignored the stronger greenback.
Sugar was up 3.8% to 21.26 US cents a pound, the highest since October 2012.
That was after a lower than forecast cane crop in Brazil, the world’s largest producer, was announced late Thursday.
