Iron ore up, oil and gas up, coal, a touch weaker, but higher than in December, copper, silver and gold all weaker as the fed’s new hawkishness, uncertainty thanks to Covid omicron and rising volatility in and around Ukraine took a toll on commodities.
The positivity brought to equities by the better-than-expected quarterly figure from Apple had no impact on commodities.
Currencies were weak as the US dollar strengthened and that saw the Aussie dollar fall under 70 US cents to 69.92 — which the doom and gloomers will jump on and warn of a negative impact on inflation, while neglecting the boost to export income.
Pushing the Australian dollar value of oil and petrol imports is a negative though, but because currencies move around so much that it will not worry the Reserve Bank.
Bond yields rose but the US 10-year yield was capped around 1.78% by demand from worried investors looking for safety. the Aussie 10-year Treasury bond eased 8 points to 1.94%, falling back under 2% which was just too high and unreal.
Iron ore prices jumped on Friday, thanks to a combination of demand post Lunar New Year break (which starts tomorrow) and fears over tight supply prospects in Australia n because of Covid and labour shortages and Brazil where wet weather is still a bit of a bugbear.
The price of 62% Fe fines imported into Northern China ended around $US147.42 a tonne during morning trading, up 5.7% compared to Thursday’s closing and. up more than 11% so far in January. The price ended 2021 at $US120.71 a tonne.
Global coal prices eased on Thursday and Friday after rising sharply towards record highs as the Ukraine crisis raises expectations that European buyers will start looking for coal outside Europe and the US if the standoff between Russia and western nations cuts off gas supplies.
The renewed buying has helped coal prices recover and then jump after falling from record highs struck last October on shortages in China and India amid extreme weather and post-pandemic industrial demand.
The benchmark Newcastle coal index has soared by over a third this month to $US262 a tonne, fuelled initially by a month-long export ban by global top supplier Indonesia and now by worries that any military action in Ukraine will cut gas supplies to Europe from Russia.
ICE thermal coal in Newcastle was around $US226 a tonne on Friday night.
Europe relies on Russia for around 35% of its natural gas, and has been grappling with a gas shortage since mid 2021 that sent local prices to record highs late last year.
Gold fell to cap a miserable week with silver and copper close behind.
Comex gold settled at $US1,786.60, down half a per cent for the day and 2% for the week.
Gold finished the week just over $US1,784 an ounce, off 2.56%; Comex silver lost 8.2%, closing at $US22.30. Comex copper shed more than 4.7% to finish the week at $US4.30 a pound.
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Meanwhile crude oil futures closed higher on Friday on security of supply worries as Russia continues to threaten to invade Ukraine.
US West Texas Intermediate (WTI) crude for March delivery closed up 21 US cents to $US86.82 a barrel and edged back up to nearly $US87.30 a barrel after hours.
March Brent crude, the global benchmark settled at $US90.03, up 2.43% WTI was up 2.9% over the week.
“There are no new reasons to explain the renewed surge in the crude oil price: it is still concerns about supply disruptions if the Ukraine crisis escalates. The risk premium on the oil price is now likely to be almost $10,” Commerzbank analyst Carsten Fritsch wrote in a note.
The rise in oil comes despite a rising US dollar, which has climbed to its highest since June, 2020, after the Federal Reserve said it expects to begin raising interest rates in March as inflation runs at the highest in 40 years.
The number of oil rigs operating in the US rose by four last week, according to energy-services firm Baker Hughes.
The count rose to 495, Baker Hughes said. A year earlier, the US had 295 oil rigs in operation.
Oil and gas rigs in the US rose by six to 610. Gas rig numbers were up two rigs at 115.
In the same period of 2021, there were 88 gas rigs and one miscellaneous rig in operation. Overall, there were 384 rigs operating a year ago.
