Gold rose, silver soared but copper continued to weaken, finishing January at its low for the month.
Friday’s rally in precious metals saw gold rise more than 1% and silver up more than 5% on the day. But copper fell more than 4% and fell again in after hours trading to end around $US3.54 a pound.
Comex silver rose from around $US25 on Thursday to nearly $US27.80 on Friday, with March Comex futures last trading at $US27.05, up 5% on the day.
Reuters said that Comex silver futures are up around 10% since Thursday when talk started on Reddit about the metal and its trading position (it is shorted regularly like every commodity, as well as bought by longs. Producers and buyers do this to protect their purchase prices and volumes).
Comex gold, meanwhile rose from $US1,840 level to nearly $US1,880 in the last two days, with April Comex futures April ending the week at $1,849.80.
Gold fell 2.4% for the month, silver was up 2% (and up nearly 6% for the week because of Redditt linked buying pressure).
Copper prices continued to slump on Friday, hitting their lowest point of the month amid a global sell-off in equities and a firmer US dollar.
Copper futures on the Comex were down to $US3.54 a pound.
Copper lost nearly 2% for the week but still ended January with a small gain of around 0.6%.
Iron ore steadied on Friday with 62% Fe fines (delivered to northern China) closing at $US158.54 a tonne, up $US1.12. The price of 65% Fe fines rose 50 cents to $US182.60 a tonne.
62% fines dipped by $US1.93 a tonne (from $US160.47 on December 31) over January, or just over 1%. They were down 6.7% for the week as well.
But 65% fines ended the month up $US9.70 a tonne or a rise of 5.6% as Chinese steel mills sought higher quality fines to blend with lower grade product to lower their raw material feed costs for their blast furnaces.
……………….
Oil prices might have jumped by more than 6% in January in a bright start to 2021, but there is now enough evidence that this confidence is misplaced and a bout of weakness could be around the corner as US output grows for the first time in more than half a year.
In New York West Texas Intermediate (WTI) for March delivery fell 14 cents to settle at $US52.20 a barrel, while in Europe, Brent added 35 cents to settle at $US 58.88 a barrel.
WTI was up 0.3% for the week any nearly 8% for the month while Brent eased 0.2% for the week but added more than 6% for the month.
The volatility in equities had little impact in commodities, except silver.
Oil ignored another rise in US oil rig use last week and also shrugged off news that US oil production edged back over 11 million barrels a day for the first time since last April.
According to a monthly report from the US Energy Information Administration (EIA), oil output rose 692,000 barrels per day (bpd) in November to 11.124 million bpd, the first time it has surpassed 11 million bpd since last April.
That was a sharp 6.6% rise from October’s average of 10.432 million bpd.
The rise came as prices rose amid a continuing cap on production by the OPEC + group (which includes Russia). Donald Trump had promised the US would support the OPEC group in some vague way but failed to do so.
Production was down 13.5% from November, 2019’s 12.860 million bpd.
US daily production bottomed at 10.0 million bpd in May 2020. November’s output was up 11% from that level.
Monthly gross natural gas production in the U.S. Lower 48 states jumped almost 3.0 billion cubic feet per day (bcfd) to 102.5 bcfd in November, according to the EIA’s production report.
That was the biggest increase in a month since output climbed by a record 5.0 bcfd in October 2008, according the EIA. The rise came on the back of early winter storms.
The EIA also indicated in a preliminary report that global demand for oil products fell sharply last year (because of the impact of COVID-19) to 92.2 million bpd. That was down 9% from 2019 and the EIA said it was the largest annual fall in its recornd going back to 1980.
That fall supports data from other sources, such as OPEC and the International Energy Agency and helps explain last year’s collapse in oil prices and the continuing underlying weakness in the first month of 2021.
……………….
Meanwhile the weekly oil and gas rig use report from Baker Hughes has shown a rise in use for the tenth week in a row, with the rig count up in January for a sixth straight month.
Producers are now committed to boosting output to take advantage of WTI prices above $US50 a barrel.
The oil and gas rig count rose by six to 384 in the week to Friday, its highest since May, Baker Hughes said in its report.
The 10-weeks of gain is the longest streak of increases since June 2018.
The rig count was up for a sixth month in a row rising 33 in January, the biggest rise since October.
Despite these recent the total count is still 406 rigs, or 51%, below this time last year. The total count is up from a record low of 244 in August.
Active oil rigs in use in the US rose by six to 29k, the highest since May, while gas rigs were unchanged.
In January, the oil rig count rose 28 in its fifth monthly increase.
