A whippy week left crude oil futures wearing some big losses thanks to a combination of fears about the rising Covid toll and lockdowns in Shanghai, worries about a supposed US recession after bigger than expected increases in interest rates from the Fed and then the latest release from the US oil reserve – and from oil stocks of other major economies this week.
On a front-month contract basis US benchmark West Texas Intermediate crude (WTI) slumped 12.8% while global marker, Brent shed 11.1%
Both crudes in fact saw their biggest weekly percentage falls since late April 2020 when crude was trading at $US10 or lower in the case of WTI.
President Biden’s decision to release one million barrels a day for the next 180 days will be matched this week by releases from other major economies following a meeting of the International Energy Agency on Friday.
The IEA includes most of Europe, Canada, Mexico, Japan and South Korea (and Australia) and it said on Friday member states had agreed to release crude from their reserves.
The agreement follows the previous action taken by IEA Member Countries, announced last month, to which they pledged a total of 62.7 million barrels in releases. The IEA will release details of the new release on Monday or Tuesday.
That came after the OPEC+ group (including Russia) agreed to cut its production cap by 432,000 barrels a day from May.
This will go a long way to offsetting the loss of 2 million barrels a day of Russian crude this month, but not millions of barrels a day of oil products such as petrol, jet fuel and chemicals.
All this saw West Texas Intermediate crude for May delivery shed $US1.01, or 1%, to settle at $US99.27 a barrel on Friday, the lowest finish since March 16. Front-month prices closed out the first quarter with a 33% gain and a 4.8% rise for March.
June Brent crude lost 32 cents, or 0.3%, to settle at $US104.39 a barrel. The expired May Brent had climbed nearly 6.9% for the month and 39% for the quarter.
Meanwhile oil services group, Baker Hughes said its weekly oil rig report showed a rise of three to 673 in the week to April 1, the highest since March 2020.
Baker Hughes said that puts the total rig count up 243 rigs, or 57%, over this time last year.
The number of US oil rigs rose in use rose by two to 533, the highest since April 2020, while gas rigs rose one to 138, the highest since October 2019.
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Comex gold prices slid as well – down 1.5% for the week and settling at $US1,923.70 before edging higher to end at $US1,928.50.
Some realistic analysts say they would not be surprised if gold dipped under the $US1,900 mark if the news of a Russian withdrawal from parts of Ukraine proves to be accurate and there’s a repeat in the hawkishness of two weeks ago from a series of senior Fed members this week.
There’s around half a dozen Fed members due to speak this week and after Friday’s solid jobs data there’s a wide belief the central bank will reveal a 0.50% rate rise at its May meeting.
Economists reckon the March jobs report will give the Federal Reserve the backing to raise rates at a much more aggressive rate.
The jobs report (and a softening in the news flow on Ukraine) in a strong fall in gold pricing with the most active June 2022 futures contract losing $US25.50 or 1.31% and ending at $US1928.50.
Friday’s fall accounted for most of the week’s fall.
The Aussie dollar ended a second week in a row above 75 US cents.
US bond yields rose on Friday, ending the week at 2.38%, up more than four basis points on the day but down nearly 10 points over the week.
Silver was also easier – down 1.5% and ending around $US24.75 an ounce while copper eased 1% to finish at a still high $US4.70 a pound on Comex.
Iron ore prices rose to end at $US160 a tonne on the Singapore futures market on Friday – up around $US4 from the previous week. Australian coking coal futures ended at $US480 a tonne, up nearly $US2 a tonne.
ICE Newcastle thermal coal index prices ended at $US258 a tonne on Friday, down around $US5 a tonne over the week.
