Oil prices give up gains; set for weekly drop
TOKYO (Reuters) – U.S. oil prices fell on Friday, taking declines to a fourth day as Asian share markets extended a sell-off on Wall Street after news of planned U.S. tariffs on steel and aluminum raised fears of a trade war.
President Donald Trump announced he would impose hefty tariffs on the two metals to protect U.S. producers, risking retaliation from major trade partners like China, Europe and neighboring Canada.
Global benchmark Brent LCOc1 was down 2 cents at $63.81 at 0740 GMT after spending most of the session slightly higher. The contract settled down 1.4 percent on Thursday, a two-week low. Brent is set for a weekly fall of 5.2 percent.
U.S. West Texas Intermediate (WTI) crude CLc1 was down 11 cents, or 0.2 percent, at $60.88 after also touching a two-week low of $60.18 a day earlier.
U.S. crude is on track for a 4.2 percent drop this week, its first weekly decline in three, having given up much of the gains in recent weeks when sentiment was boosted by a fall in inventories at the Cushing delivery point for WTI.
“The market is not showing any obvious signs of turning around the mood. We are being driven by the pick-up in U.S. inventories and in general terms the market went a bit too far too soon,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
“Then we have the volatility in the U.S. dollar and the implications of the tariff news to factor in,” he said.
U.S. crude stocks USOILC=ECI rose last week even as refineries hiked output, increasing by 3 million barrels, compared with expectations for an increase of 2.1 million barrels.
Still, stocks fell again at Cushing in Oklahoma, with inventories USOICC=ECI down by 1.2 million barrels, the 10th consecutive week of declines, the Energy Information Administration said this week.
“Although destocking in Cushing has continued, with stocks there falling below 30 million barrels for the first time since late 2014, the overall increase in U.S. oil stocks has overshadowed the good news,” Fawad Razaqzada, market analyst at Forex.com, said in a note.
The Organization of the Petroleum Exporting Countries (OPEC) will hold a dinner on Monday in Houston with U.S. shale firms, the latest sign of the producer group widening talks about how best to tame a global oil glut.
U.S. crude output slipped in the last month of 2017, but in November hit an all-time high of 10.057 million barrels per day (bpd). Weekly data showed another record and further gains are expected.
Gold inches up as dollar dips on Trump’s tariff decision
- Gold prices rose slightly on Friday as the dollar eased on fears of an imminent trade war.
- U.S. President Donald Trump announced plans to impose heavy tariffs on imported steel and aluminum.
Gold prices rose slightly on Friday as the dollar eased on fears of an imminent trade war following U.S. President Donald Trump’s decision to impose steep tariffs on imported steel and aluminium.
Spot gold had risen by 0.1 percent to $1,316.84 an ounce by 0412 GMT, but was on track for a second straight weekly drop after having declined 0.9 percent so far.
Prices fell to the lowest since Jan. 2, at $1,302.61, in the previous session under pressure from expectations of more interest rate hikes in the United States than expected this year.
U.S. gold futures were up almost 1 percent at $1,317.7 per ounce on Friday.
“The U.S. imposed trade tariffs and those that come back our way in the form of retaliation should be net negative for the dollar and could conceivably provide gold with some support,” INTL FCStone analyst Edward Meir said in a note.
The dollar index, which measures the greenback against a basket of major currencies, was down 0.2 percent at 90.171. It shed 0.4 percent overnight, pulling back from a six-week high of 90.932 touched early on Thursday, after Trump’s decision.
The Trump administration said the tariffs would protect U.S. industry, but the dollar and Wall Street shares slumped as the plan sparked fears of a trade war and worries about its potentially negative impact on the world’s largest economy.
Meanwhile, Federal Reserve Chairman Jerome Powell said on Thursday there was no evidence the U.S. economy is overheating, and labor markets may still have room to improve as the central bank sticks with a gradual pace of rate hikes.
The precious metals market would continue looking out for interest rates along with the dollar’s movement, said Dick Poon, general manager at Heraeus Metals Hong Kong Ltd.
A stronger dollar and higher interest rates reduce demand for non-interest bearing gold as the metal becomes more expensive for holders of other currencies.
“Weaker equity markets could also provide a shot in the arm for the precious metal,” said Meir.
Stock markets in Asia on Friday extended a Wall Street rout as the risk of global trade war spooked investors.
Spot gold is expected to bounce more into a range of $1,325-$1,332 per ounce, following its failure to break a support at $1,303, according to Reuters technical analyst Wang Tao.
Holdings of SPDR Gold Trust rose 0.35 percent to 833.98 tonnes on Thursday from 831.03 tonnes on Wednesday.
In other precious metals, silver was down 0.3 percent at $16.41 an ounce after touching its lowest in over two months at $16.16 in the previous session.
Platinum was 0.1 percent lower at $965.40 per ounce after falling to its lowest since Jan. 4 at $950.50 on Thursday.
Palladium rose 0.2 percent to $991 after recording its biggest one-day percentage fall of 5.1 percent since Jan. 25, 2017, in the previous session.
U.S. aluminum premiums hit near three-year high after U.S. flags import duty
MELBOURNE (Reuters) – Premiums for aluminum metal in the United States spiked to the highest in almost three years after President Donald Trump flagged a 10 percent import duty, as buyers sought to secure metal before higher costs come into force.
Premiums are paid by buyers on top of exchange prices to cover insurance and the cost of delivery, and signal the strength of demand for physical metal.
Trump said on Thursday he would impose duties of 25 percent on steel and 10 percent on aluminum to protect U.S. producers, risking retaliation from major trade partners like China, Europe and neighboring Canada.
Spot premiums for Comex aluminum jumped to 17 cents a pound ($375 a tonne) on Thursday, before finishing at 15.2 cents, up 12 percent and the highest since April 2015.
“I would assume that premiums have jumped because people are saying that it will be harder to get aluminum,” said analyst Lachlan Shaw of UBS in Melbourne.
“It seems a bit of a kneejerk over-reaction to me. There will still be metal available, it will just cost more.”
Aluminum premiums were also boosted by a lock-out of union workers at an Alcoa smelter in Quebec, which has cut its operation by about two-thirds, said a source at a global producer.
Traders and analysts said premiums would likely settle lower in the short-term, but remain at elevated levels.
Shaw noted the proposed U.S. duty would take the total cost for the 150 kg (330 lbs) of aluminum contained of the average car body to $365 from $330.
Australia’s CBA bank said the United States hoped to add about 670,000 tonnes of domestic aluminum output, which would displace about 1 percent of global aluminum production.
“We expect aluminum markets will be able to absorb the impact quite comfortably,” CBA said in a report.
The United States imported around 7 million tonnes of crude, semi-manufactured and aluminum scrap, according to U.S. government statistics, mostly from Canada, Russia, the UAE and China.
Some traders had been increasing metal shipments to the United States since December, hoping to cash in on the tariffs, said a source at a metals warehousing company in Singapore.
“A lot of people picked this well ahead, and they reacted early on,” he said.“If it hasn’t sailed before the end of January it’s going to miss the window.”
Comex aluminum stocks have surged by more than 50 percent this year to 65,327 to
METALS–Shanghai aluminium hits over 2-wk high on U.S. import tariff plan
BEIJING, March 2 (Reuters) – Shanghai aluminium prices touched their highest level since Feb. 12 on Friday, shrugging off U.S. President Donald Trump’s pledge to impose a 10 percent tariff on imports of the metal.
Lower Chinese exports to the United States could leave China’s domestic market in greater surplus, but Argonaut Securities in Hong Kong played down the significance of move.
The “import duty increase on aluminium products will have a small impact on China’s aluminium export and domestic market, in our view,” the brokerage wrote in a note.
“China’s aluminium products exports to US accounted for around 14 percent of its total exports in 2017 and represent only 1 percent of China’s total aluminium production,” it added.
SHFE ALUMINIUM: The most-traded April aluminium contract on the anghai Futures Exchange (ShFE) was up 0.1 percent at 14,365 yuan ($2,261.49) a tonne by the mid-session interval, having earlier climbed to as high as 14,480 yuan, its highest since Feb. 12. It has risen 0.7 percent this week, and is set for its best weekly gain since the week ending Dec. 29.
LME ALUMINIUM: Three-month aluminium on the London Metal Exchange was down 0.4 percent at $2,139 a tonne as of 0400 GMT, after rising 0.7 percent in the previous session.
ALUMINIUM: U.S. President Donald Trump announced on Thursday he would impose hefty tariffs on imported steel and aluminium to protect U.S. producers, risking retaliation from major trade partners like China, Europe and neighbouring Canada.
PREMIUMS: Premiums for aluminium in the United States spiked to the highest in almost three years as buyers sought to secure metal before higher costs come into force.
COPPER: Three-month copper on the London Metal Exchange was up 0.1 percent at $6,925.50 a tonne, having closed down 0.1 percent on Thursday.
SHFE COPPER: The most traded Shanghai copper contract was flat at 52,370 yuan a tonne. Market open interest on ShFE copper surged to 855,760 lots on Thursday, its highest since November 2015.
NICKEL: Shanghai nickel was the biggest loser, slipping 2.3 percent to 102,100 yuan a tonne, tracking a 2.4 percent dip in London on Thursday amid a stainless steel inventory overhang.