Commodity prices weakened last week, driven by the 9% slide in oil prices and the impending US rate rise this week from the Fed.
Oil saw its biggest fall since early November at more than 9%, while gold sold off for a second week in a row and is now down more than 4% in that time.
Comex gold prices fell for a ninth session on Friday, contributing to a loss for the week as the better-than-expected US employment data for February saw a possible Federal Reserve rate rise this week become a 100% certainty in the mind of the market.
And while gold prices dipped to a low of $US1,195 an ounce in trading, the closed above the key $1,200-an-ounce level and ended off the session’s lows.
Gold for April delivery fell $US1.80, or nearly 0.2%, to settle at $1,201.40 an ounce – the lowest finish since the end of January.
Gold’s fell for the ninth trading session in a row – the longest streak of declines since July 2015, according to FactSet data.
For the week, prices ended around 2% lower, adding to the 2.5% loss the previous week.
Comex May silver fell 11.3 cents, or 0.7%, to $US16.923 an ounce – for a weekly loss of 4.6%. And Comex copper for May delivery fell 1.5 cents, or 0.6%, to $US2.595 a pound, down 3.8% lower for the week.
And iron ore with 62% Fe content delivered to Qingdao in China (the country’s main iron ore port) – lost 5% last week to end at $US86.70, against the most recent high of $US94.86 on February 21.
Meanwhile oil prices fell for the fifth trading session in a row to chalk up a weekly loss of 9.1%.
Concerns that rising US production will offset output declines by other major producers aimed at rebalancing the market have pulled prices to their lowest settlement since late November.
April West Texas Intermediate crude fell 79 cents, or 1.6%, to settle at $US48.49 a barrel. prices continued easing after hours and oil was around $US48.38 at the end of trading.
In London, May Brent crude dropped 82 cents, or 1.6% to $US51.37 a barrel down 8.1% for the week.
The sharp selloff came after investors, who in recent weeks had ignored the growing US production and stocks of crude, finally took notice and jumped.
America’s Energy Information Administration reported US stocks rose by 8.2 million barrels to a record 528.4 million barrels
And the agency also reported that US crude output rose to its highest level in more than a year at 9.088 million barrels per day (bpd), and will continuing rising.
On Friday, Baker Hughes reported that the number of active US rigs drilling for oil rose for a 9th week by 8 to 617 rigs this week. That’s nearly 60% above the level of a year ago. Baker Hughes said the total active US rig count, which includes oil and natural-gas rigs, rose by 12 to 768 – that’s 58% higher than a year ago.
Baker Hughes oil rig count plunged from a record 1,609 in October 2014 to a six-year low of 316 in May 2016 as oil prices collapsed from over $US107 a barrel in June 2014 to near $US26 11 months ago.
The EIA says US production is projected to rise from 8.9 million bpd in 2016 to 9.2 million bpd in 2017 and a record high of 9.6 million bpd next year.
If the drilling and production trends continue, then oil prices will some under more pressure and continue going south, forcing another rounds of cutbacks.
