The OPEC+ production cut announcement provided all the excitement in commodity markets last week and significant support to oil prices but the September jobs report on Friday saw the oil bulls forced onto the back foot.
The enlarged cartel decided to reduce its production by 2 million barrels a day, while the market has been expecting a cut of one million barrels a day.
Analysts say that with underproduction among OPEC members who have not invested in recent years, the actual reduction in production will be a million or so barrels a day.
US West Texas Intermediate crude futures ended the week at $US92.64 while Brent ended at just under $US98 a barrel.
News of the cut sent Brent crude futures prices up 15% over the week while US crude jumped nearly 17% for the week.
Meanwhile in a commentary, energy analysts at Commerzbank wrote on Friday that energy agencies are poised to confirm that oil supply will be “too tight” next year following the OPEC+ decision to cut.
This indicates prices are expected to remain elevated, according to the Commerzbank note on Friday.
The cartel’s decision shows it is “doing its utmost to avert a price slump,” the bank’s analysts said in the note.
“Though daily output is in reality likely to decline by only 1 million barrels because many countries are already producing well below quota, this would still be enough to prevent the surplus that has been predicted for the final quarter of this year.”
The number of oil rigs operating in the US fell by two last week to 602, according to energy-services firm Baker Hughes. A year earlier, the US had 433 oil rigs in operation.
Oil and gas rigs in the US declined by three to 762. Gas rigs dropped by one to 158. There were 533 rigs operating a year ago.
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In metals, the London Metal Exchange (LME) confirmed that it is looking at restricting the supply of metals from Russia, including those from Ural Mining, whose co-founder is under sanctions in the UK.
The LME could go further by banning deliveries of Russian-sourced copper, aluminium and also nickel.
These potential sanctions helped support the prices of industrial metals but by Friday Comex copper had lost 0.8% for the week and settled at $US3.41 a pound. Comex silver though jumped 6.5% to $US20.19 and Comex gold had risen 2.3% by Friday when it settled at $US1,709.30 an ounce.
Helping that was a weakening in the value of the US dollar over the week until Friday and the US jobs report.
Grain prices were broadly stable in Chicago, with wheat and corn trading at 890 and 676 US cents a bushel, respectively.
Brazil is forecasting a 12.5% increase in 2023 corn production from last year, a significant increase mainly due to an unfavourable base effect, as Brazil experienced severe drought in the 2021 and 2022 season.
Iron ore prices dipped with the SGX futures market around $US94.40 a tonne – steady on a week earlier but within sight of the November, 2021 lows around $US80.80 a tonne.
Newcastle thermal coal prices fell sharply with the spot price down to $US385 a tonne and the front month futures price (December) down $US25 a tonne on the day to just over $US379 a tonne.
That was down almost 8% for the week and one of the biggest weekly falls for some months.
LNG prices in northern Asia were around $US34 to $US35 a million British thermal units (mBtus), down around $US5 over the week and the lowest since mid-June.
