It was oil setting the tone again with another push higher for the seventh week in a row, while other commodities also did well, led by copper, silver, gold and iron ore.
By Friday’s close oil prices rose more than 6% for Brent and 7% for US type West Texas Intermediate crude last week and are now up by more than 15% since the start of 2022.
If sustained for another month to six weeks, this will mean another big inflation reading across the globe and especially in the March quarter’s Consumer Price Index.
US WTI crude surged to fresh seven-year highs on Friday up $US2.04 to settle at $US92.31 a barrel.
April Brent crude, the global marker, was up $US2.14 to $US93.25.
Traders say nothing seems able to bring stop this upward pressure, which is now pushing speculators to open long positions on futures contracts with a delivery price of $US100 a barrel or more (and reports of $US125 a barrel) by the end of this year.
In other words, many investors see oil above USD 100 per barrel this year. The OPEC+ meeting offered little respite for investors, lifting output for the group by another 400,000 barrels a day but that was it – no sign of any further relaxation of the cap to meet pressures from the US and other big consumers.
Reuters and other media have reported shortfalls in the existing cap in January thanks to problems in Libya and other strained producers.
The rise to the highest since the autumn of 2014 also comes as a winter storm pushes temperatures in central Texas below freezing, raising worries over potential power disruptions and frozen wellheads. The storm pushed north over the weekend, dropping temperatures and sending energy consumption higher.
Despite the storm, gas prices fell nearly 7% on Friday but are still up more than 26% year to date.
“The latest upswing was triggered by a cold snap in Texas, which is fuelling concerns about production outages in the Permian Basin, the largest US shale play. A year ago, a period of extreme cold weather had caused massive disruptions to oil production there,” Commerzbank analyst Carsten Fritsch said in a note.
Commerzbank on Friday raised its forecast for average Brent oil prices this quarter to $US90 per barrel from US$80 as it sees a risk premium remaining as Russia continues to threaten an invasion of Ukraine.
Meanwhile US energy firms last week added oil and natural gas rigs for a fifth week in a row for the first time since November as crude prices rallied to a seventh week to levels not seen since 2014.
The oil and gas rig count, an early indicator of future production changes, rose three to 613 in the week to last Friday, its highest since April 2020, energy services firm Baker Hughes Co said in its weekly report on Friday.
Baker Hughes said that puts the total rig count up 221, or 56%, above this time last year. The number of oil rigs rose two to 497, the highest since April 2020, while gas rigs were up one to 116, the highest since January 2020.
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Gold rebounded from early weakness on Friday after the stronger than expected US jobs report boosted the dollar while bond yields rose to the highest since before the pandemic in late 2019.
Comex gold for April delivery closed up $US3.70 to settled at $US1,807.80 an ounce, after earlier falling as low as $US1,792.10.
The rise came after January saw 467,000 new jobs created, well ahead of expectations for a rise of 150,000.
The dollar rose following the report’s release, with the Aussie dollar falling under 71 US cents to around 70.77.
The ICE dollar index was up 0.08 points to 95.48.
Bond yield also rose sharply, bearish for gold since it offers no interest. The yield on the US 10-year note touched 1.939%, the highest since November, 2019.
Comex silver rose for the week – up less than 0.8% at just over $US22.47 an ounce – while Comex copper ended a strong week with a gain of 4.2% to finish at $US4.4835 a pound.
