Gold prices flat as rate hike worries ease

* Spot gold may revisit March 9 low of $1,312.99/oz -technicals

* Investors see aggressive rate hike worries ease

By Eileen Soreng

Spot gold was flat at $1,323.07 per ounce at 0315GMT. U.S. gold futures for April delivery were littlechanged at $1,323.70 per ounce.

The dollar index against a basket of currencies wasdown 0.1 percent at 90.038.

“The labour report that we saw in the U.S. on Friday hasspilled over into this week … Slowdown in the growth of wageslast month has certainly eased concerns about more aggressiverate hikes,” said ANZ analyst Daniel Hynes.

Inflation worries faded after U.S. data on Friday showednonfarm payrolls jumped by 313,000 jobs last month, but annualgrowth in average hourly earnings slowed to 2.6 percent after aspike in January.

Money market traders stuck to bets that the U.S. FederalReserve would raise interest rates three times this year, withonly around a one-in-four chance seen for a fourth rate hike in 2018.

A relief rally swept across Asian share markets on Monday inthe wake of the jobs report.

Inflation concerns generally boost gold, which is seen as asafe-haven against rising prices. But expectations the Fed couldraise interest rates to fight inflation make gold lessattractive because it is not interest-yielding.

“We still are somewhat wary on gold short-term as we suspectthat the precious metal will struggle on account of a strongerdollar, which we expect to start perking up as we head closer tothe (next) Fed meeting,” INTL FCStone analyst Edward Meir saidin a note. The central bank is due to meet from March 20.

Spot gold may revisit its March 9 low of $1,312.99 perounce, as suggested by a double-top and a retracement analysis, according to Reuters technical analyst Wang Tao.

Meanwhile, speculators raised their net long position ingold by 4,178 contracts to 161,812 contracts, Commodity FuturesTrading Commission (CFTC) data showed.

Among other precious metals, silver fell 0.1 percentto $16.58 per ounce.

Palladium was down 0.1 percent at $994.72 per ounce,while platinum was flat at $964.50 per ounce.




UK commodity trading tax regime in EU probe over suspected breach


The European Commission is probing the UK tax regime for London’s commodity derivatives market over claims it breaks European rules.

The Commission has started infraction proceedings against the UK over the set-up, which means no VAT is paid on exchange-traded contracts for commodities like gold and oil.

Such proceedings against EU states are commonplace from the European Commission and often rumble on for many years, but these come amid ongoing tensions between the UK and EU over Brexit.

The Treasury said the EU’s move has no impact on UK tax law at the moment and will write back to the Commission by May.

Two of the world’s biggest commodity exchanges, the London Metal Exchange and the Intercontinental Exchange, are in London.




Shanghai nickel rises sharply after LME inventory dip

(Reuters) – Nickel led a rise in Shanghai base metals prices on Monday following a drop in London Metal Exchange (LME) nickel stocks on Friday, while a rally in Asian equities helped take the rest of the complex higher, with the exception of aluminium.


* SHFE NICKEL: The most traded July nickel contract on the Shanghai Futures Exchange (ShFE) was up 3.5 percent at 104,350 yuan ($687.37) a tonne by 0133 GMT, on course for its biggest daily jump since Nov. 2, having opened up 4.3 percent as it tracked Friday’s surge in the LME price.

* LME NICKEL: London nickel was trading down 0.6 percent, having leapt 4.5 percent on Friday after LME data showed a 13 percent slide in on-warrant stocks.

* COPPER: Three-month copper on the London Metal Exchange was down 0.3 percent to $6,941 a tonne, having closed up 1.9 percent in the previous session. The most-traded May ShFE copper contract gained 1.2 percent.

* ALUMINIUM: Shanghai aluminium was down 0.6 percent at 14,120 yuan a tonne, after touching a one-year low on Friday, with winter restrictions on Chinese smelters set to be lifted in three days’ time.

* TARIFFS: The United States opened the way for more exemptions from its steel and aluminum tariffs on Friday, after pressure from allies and intense lobbying from lawmakers, further diluting the measures just a day after they were formally announced.

* WAREHOUSING: The head of Maike Group, China’s biggest privately held metals trader, said he would propose at this year’s parliament session to allow warehouses registered to the London Metal Exchange (LME) to be set up in Shanghai’s planned free-trade port.

* LITHIUM: Chile’s government has asked antitrust regulators to block the sale of a stake in lithium company SQM to a Chinese company on the grounds it would give China an unfair advantage in the global race to secure resources to develop electric vehicles, according to a document seen by Reuters.

* DRC: Democratic Republic of Congo President Joseph Kabila signed into law on Friday a new mining code that raises royalties and taxes on operators, the presidency said in a statement.



OPEC Divided on the Right Price for Oil

Iran wants to see $60 a barrel to rein in shale producers, while Saudi Arabia’s budget needs $70

By Benoit Faucon and Summer Said

OPEC is breaking down into two camps after more than a year of unity. On one side is Saudi Arabia, which wants oil prices at $70 a barrel or higher, and on the other is Iran, which wants them around $60.

The split is driven by differing views over whether $70 a barrel sends U.S. shale companies into a production frenzy that could cause prices to crash. At stake is the Organization of the Petroleum Exporting Countries’ production limits, which are among factors helping the oil market’s monthslong recovery.

Iran wants OPEC to work to keep oil prices around $60 a barrel to contain shale producers, Oil Minister Bijan Zanganeh told The Wall Street Journal in a rare interview. That is a little below Friday’s prices of $65.49 a barrel for Brent crude, the international benchmark, and $62.04 in the U.S.

“If the price jumps [to] around $70…it will motivate more production in shale oil in the United States,” Mr. Zanganeh said. Shale producers are more nimble than big OPEC producers, using techniques that allow them to increase or decrease production depending on the oil price.

Saudi Arabia has played down shale’s ability to upset the market and has touted OPEC’s alliance with the world’s largest crude producer, Russia, as a bulwark against U.S. output.

Russia and nine other producers have joined OPEC’s production limits, cumulatively withholding about 2% of the world’s crude output.

“I don’t lose sleep that shale is going to come and overwhelm us,” Saudi Energy Minister Khalid al-Falih said in January at the World Economic Forum in Davos, Switzerland. The following month, Mr. Falih said OPEC would stick with its production limits this year, even if it meant oil supplies fell below demand—remarks that caused oil prices to rise.

Mr. Falih has never publicly called for $70 a barrel. Privately, Saudi officials say they want that level to provide revenue for Crown Prince Mohammed bin Salman’s ambitious economic and military spending plans and to support the initial public offering of Saudi Arabian Oil Co., the state-owned energy giant known as Aramco.

The reaction of U.S. shale producers to $70 a barrel was a focal point in January, when Brent crude briefly breached that level. Shale producers have generally ramped up output since OPEC’s production deal in 2016 sent oil prices into recovery mode, with U.S. daily output rising to over 10 million barrels in just over a year from less than 9 million barrels.

If oil prices averaged $70 a barrel next year, it would result in an additional 600,000 barrels a day of U.S. production compared with $60, said Artem Abramov, vice president for analysis at Norwegian consultancy Rystad Energy.

The International Energy Agency said this week that shale production had already risen so much that demand for OPEC crude would remain below the cartel’s current production through 2020. That could pressure the group to limit output for longer than most members anticipated.

Concerns about shale output will likely dominate OPEC’s next meeting in June in Vienna, OPEC officials say.

Iran will press for carefully bringing back some of its own production, Mr. Zanganeh said, potentially putting downward pressure on oil prices. The country pumps about 3.8 million barrels a day and could produce about 100,000 barrels a day more.

Mr. Zanganeh said OPEC could agree in June to begin easing current production limits in 2019. The Saudis have expressed openness to that idea.

The debate over prices reflects a shift in OPEC’s internal dynamics. Previously, Iran had long advocated for higher prices, while Saudi Arabia had been a voice of restraint.

The change partly reflects new dynamics in both countries’ politics and economics. No longer crippled by Western sanctions, Iran needs an oil price of only $57.20 a barrel to balance its national budget, according to the International Monetary Fund. Saudi Arabia needs about $70 a barrel to cover record national spending this year.

Saudi Arabia and Iran are also at odds politically. They have backed different sides in the Syrian civil war, the Saudis have lobbied for tighter sanctions on Tehran, and Riyadh accuses Iran of funding and arming Yemeni rebels.

Mr. Zanganeh insisted Iran wants to have a good relationship with the kingdom.

Russia is likely to be an important factor in any OPEC oil-price debate. Though it isn’t a member of the group, Russia’s production cuts have given it special influence with the cartel.

Russian Energy Minister Alexander Novak told state TV last month that prices around $64 a barrel were “satisfactory.” A spokeswoman for the ministry couldn’t be reached for comment.

The division also marks an opportunity for Mr. Zanganeh, OPEC’s longest-serving oil minister, to again assert his power. He negotiated a special carve-out for Iran to cap, but not cut, its production so the country could attempt an oil-industry comeback following the end of nuclear-related sanctions.

Mr. Zanganeh expressed skepticism over OPEC’s previous efforts to contend with shale production. He told The Journal that a meeting last Monday in Houston between top OPEC officials and shale-company executives was unnecessary because U.S. producers can’t reach comprehensive agreement on output.

“It’s 1,000 entities. They don’t have an union” of shale producers, he said. A production “cut is the only thing that OPEC has to manage the market.”




Oil slips as higher U.S. output looms despite dip in drilling

* U.S. drillers cut for first time in 7 weeks -Baker Hughes

* But U.S. output still expected to rise this year

By Henning Gloystein

SINGAPORE  (Reuters) – Oil prices gave up earliergains on Monday as rising U.S. output loomed over markets,despite a slowdown in rig drilling activity.

U.S. West Texas Intermediate (WTI) crude futures CLc1 wereat $61.90 a barrel at 0714 GMT, down 14 cents, or 0.2 percent.

Brent crude futures LCOc1 were at $65.36 per barrel, down13 cents, or 0.2 percent, from their previous close.

Prices had risen on Friday and earlier on Monday.

“A falling rig count and the strong employment data may havehelped support prices,” said William O’Loughlin, investmentanalyst at Rivkin Securities.

The U.S. economy added the biggest number of jobs in morethan 1-1/2 years in February, with non-farm payrolls jumping by313,000 jobs last month, the Labor Department said on Friday.

In oil markets, U.S. energy companies last week cut oil rigsfor the first time in almost two months RIG-OL-USA-BHI , withdrillers cutting back four rigs, to 796, Baker Hughes GE.N energy services firm said on Friday.

Despite the lower rig count, which is an early indicator offuture output, activity remains much higher than a year agowhen, when just 617 rigs were active, and most analysts expectU.S. crude oil production C-OUT-T-EIA , which has already risenby over a fifth since mid-2016, to 10.37 million barrels per day(bpd), to rise further.

That’s more than top exporter Saudi Arabia produces andalmost as much as Russia pumps out, at nearly 11 million bpd.

Singapore-based brokerage Phillip Futures said that the oilmarket “will focus on OPEC and IEA (monthly) reports this weekfor a sensing on global demand/supply levels for crude oil” andthat “items in focus will include OECD commercial stock levels,revision in global demand and supply for crude oil and OPEC’scompliance on production levels”.

The Organization of the Petroleum Exporting Countries(OPEC), together with a group of other producers led by Russia,has been withholding production since the start of 2017 to propup prices.

It is not clear when the deal to withhold output will end,but Iranian oil minister Bijan Zanganeh said OPEC could agree inJune to begin easing current oil production curbs in 2019, theWall Street Journal reported on Sunday.




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