Another big week for oil last week, but gold saw more circumspect trading. In fact, while gold hardly moved all week, oil’s weekly gains were the largest in up to five years.
That’s despite falls on Friday as worries about Greece’s financial health dominated and saw bond yields fall and the US dollar gain.
Crude oil futures fell from their 2015 peaks in choppy trading on Friday night, our time, but Brent’s 9.6% jump was its largest in more than five years as Middle East turmoil and signs of lower US production lifted prices.
And US West Texas (WTI) crude futures also retreated from its 2015 high on Friday, but notched up a fifth straight weekly gain, which at 7.9% was the biggest since February 2011.
Brent June crude in London fell 53c on Friday night to settle at $US63.45 a barrel, after hitting $US64.95, its 2015 high, on Thursday.
It was Brent’s second straight weekly gain, the fourth in five weeks and the largest since the 9.9% jump in late October 2009.
In New York, Nymex WTI fell 97c to settle at $US55.74. It hit its 2015 peak of $US57.42 on Thursday.
Escalating fighting in Yemen boosted last week’s rally and on Friday government military units protecting the Masila oilfields withdrew, meaning the rebels could soon get control.
While Yemen is not a major oil producer, the fighting raises concern about risks to supply from the region’s major exporters, particularly Saudi Arabia whose major oil producing province is next door to Yemen.
Helping send oil prices lower though was the latest update on US oil and gas rig use from Baker Hughes.
That report showed the number of US oil drilling rigs fell for a record 19th straight week, although the 26-rig drop was lower than the previous week’s fall of 42. Also data last week from the US government suggests US oil production may soon start slowing.
US research group FactSet points out that US WTI futures are up more than 25% in just the last month, mostly on the hope of a fall in US output.
The question is how much more is left in this rally – especially if the rising oil price starts seeing rig use rise in coming weeks as companies in the shale areas move back into drilling new wells.
The US Energy Information Agency reckons production from the fastest-growing US shale plays is set to fall by 45,000 month on month in May from April. if that happens it would be the first monthly fall in four years, FactSet says.
So will this be enough to keep the rally in oil prices alive?
Meanwhile, Comex gold futures rose on Friday as a decline in global stock markets boosted demand for the precious metal, but they still finished the week about 0.1% lower.
Comex June gold added $US5.10, or 0.4%, to settle at $US1,203.10 an ounce in New York.
