A second day of the relief rally for oil as the impasse in the OPEC+ group between Saudi Arabia and the UAE remained unresolved.
Traders pushed up oil prices blithely ignoring the reality of the uncertain situation – that the longer there is no agreement, the more likely the global production cap in the OPEC+ group will collapse.
And even if there is some sort of pastiche of an agreement between the Saudis and the UAE, it will be observed in the breach rather than the substance, especially if the Emiratis are seen by rivals as getting some sort of one-off advantage.
Friday saw oil prices rise for a second day as the market focused on falling inventories (in the US), and signs of strong Asian demand from both China and India added support.
Brent crude oil futures were up $US1.43 or 1.93%, at $US75.55. US West Texas Intermediate futures were up $US1.62, or 2.2%, at $US74.56.
Prices on both sides of the Atlantic ended the week little changed, despite significant daily fluctuations. Brent fell 0.7% for the week while WTI was steady.
Prices were weighed down early in the week by the collapse of output in OPEC+ that have shown no sign of being revived.
US crude and petrol stocks fell and petrol demand reached its highest since 2019, the US Energy Information Administration said on Thursday.
The global spread of the Delta coronavirus variant and worries it could stall a worldwide economic recovery will have more impact this week with news the US saw a sharp rise in new infections last week.
Gold bulls see some upside from the rising tide on infections and doubts about the health of major economies.
Comex gold gained 0.6% to $US1,810.60 an ounce, silver rose 0.4% to $US26.25 an ounce, and copper surged 1.9% to $4.34 a pound.
That’s the first time in three weeks that gold has climbed over and ended above $US1,800 an ounce.
That left the metal up 1.8% for the week.
This week will see gold traders closely watch Fed chair, Jay Powell’s semi-annual monetary policy testimony to Congress.
That will be a day after the June Consumer Price Index data is released which is forecast to show a small easing.
Powell will no doubt be asked about the fall in bond yields last week to a low of $1.24% on Thursday as well as the latest inflation data.
The yield on 10-year bonds finished around 1.36% on Friday from Thursday’s close around 1.31%.
Analysts are looking for the Fed clarifying its bond buying tapering timeline.
“Given the supply-side strains within the economy, the likely timing of policy tightening is being brought forward, and [Powell] may offer clearer hints that a tapering of QE asset purchases will start this year,” ING chief international economist James Knightley said in a note on Friday.
In London copper rose 1.5% over the week to end at $US9,519 a tonne for three-month metal. All of that rise came with Friday’s 2.1% bounce.
Iron ore prices were a touch weaker over the week.
The price of 62% Fe fines delivered to northern China fell $US3.27 on Friday to end the week at $US214.77 a tonne.
That was down $US3.21 a tonne over the week. 58% Fe fines fell $US2.87 a tonne to $US180.07 to be down 29 cents over the week.
The price of 65% Fe fines from brazil fell $US3 a tonne on Friday to $US248.40. That was down $US3.20 a tonne from the previous Friday.
