Oil prices steadied on Thursday as investors covered short positions ahead of a long U.S. holiday weekend, though signs of market oversupply grew more apparent. Gold prices advanced as a much weaker-than-expected U.S. jobs report eased concerns about Federal Reserve interest rate hikes. Copper and aluminum prices on the London Metal Exchange saw modest gains.
Oil: Prices Stabilize as Investors Cover Shorts
Oil steadied near pre-war lows as traders covered some bearish bets before the U.S. holiday weekend.
The U.S. benchmark, WTI crude, rose 0.2%, settling just below $69 a barrel. However, a key indicator flashed a sign of oversupply for the first time since November, and oil flows via the Strait of Hormuz from the Persian Gulf surged. Brent futures edged slightly higher on the day, closing below $72 a barrel.
Data showed crude flows via the Strait of Hormuz spiked to 14 million barrels on July 1. In addition to this, oil being rerouted via the Saudi Red Sea coast and the UAE port of Fujairah amounted to roughly 6.2 million barrels per day.
While single-day flows provide very limited information, they still indicate how quickly supply from Persian Gulf producers is rebounding. In February, exports via Yanbu, Fujairah, and the Strait of Hormuz were about 18 million barrels per day.
The result of the export recovery is a wave of oil hitting the market while many wartime supply workarounds remain in place.
"A wave of oil is coming to the market," said Natasha Kaneva, Head of Commodities Research at JPMorgan. "The paradox is here. The surge in oil supply is about to hit a market that, at least for now, simply doesn't need it."
WTI crude for August delivery rose 0.2% to settle at $68.69 a barrel.
Brent crude for September delivery gained 0.3% to settle at $71.80 a barrel.
Precious Metals: Spot Gold Jumps on Soft U.S. Jobs Data Easing Rate Fears
Gold prices surged as weak U.S. employment data alleviated market worries about the Federal Reserve hiking rates to curb inflation.
Spot gold jumped as much as 2.8% following the release of the June non-farm payrolls report, extending a rebound from near seven-month lows.
The data showed U.S. job growth slowed significantly in June, with the reported figure coming in below the forecasts of all but one economist in a Bloomberg survey.
The weak jobs data will ease pressure on Fed Chair Wash to hike rates in July. Wash's remarks at a European Central Bank forum on Wednesday were perceived by the market as less hawkish than previously feared.
Ewa Manthey, Commodities Strategist at ING Bank, stated that the weaker-than-expected jobs report has brought rate cuts back into view, pushing U.S. Treasury yields and the dollar lower and providing fresh upward momentum for gold. She expects gold's subsequent trajectory to depend on whether upcoming economic data supports expectations for rate cuts.
As of 3:46 p.m. New York time, spot gold was up 2.1% at $4,113.32 an ounce. Silver rose 2.5% to $60.63. Platinum and palladium also advanced. The Bloomberg Dollar Spot Index fell 0.4%.
Base Metals: Copper and Aluminum Edge Higher in London
At the close of the London market:
LME copper rose 0.2% to $13,326 a ton.
LME aluminum gained 0.5% to $3,091.5 a ton.
LME zinc fell 0.3% to $3,487 a ton.
LME nickel declined 0.6% to $16,250 a ton.
LME tin dropped 1.3% to $50,960 a ton.
LME lead rose 0.5% to $1,875.5 a ton.
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