Oil rises but remains at multi-month low on recession fears
Oil prices closed higher at the weekend, paring losses this week on strong US jobs growth data, but closed this week at its lowest level since February.
Closing the session on August 5, Brent oil gained 80 US cents to 94.92 USD/barrel, down 11% for the whole week. WTI crude rose 47 cents to $89.01 a barrel, down 8% this week.
Strong US jobs data supported the oil market.
Oil traders are worried about inflation, economic growth and demand this week but signs of tight supply keep oil prices low.
According to energy services company Baker Hughes, oil drillers fell 7 rigs to 598 rigs in the week to Aug. 5, the first weekly decline in 10 weeks.
Fears of a recession have grown since the Bank of England warned of a prolonged economic slump after it raised interest rates by the most since 1995.
Supply is still quite limited. Supply concerns are expected to intensify near winter, with European Union sanctions banning seaborne imports of crude oil and petroleum products from Russia taking effect on December 5.
Gold down 1%
Gold prices continued to drop nearly 1% as unexpectedly strong US jobs report eased recession worries and quelled speculation the Federal Reserve will pivot away from its aggressive monetary policy tightening. .
Spot gold fell 0.9% to $1,775.09 an ounce, after falling about 1.5% in the early session. US gold for December delivery closed down 0.9% at $1,791.2 an ounce.
The positive jobs picture gives the Fed more room to raise interest rates without the risk of pushing the economy into recession, and gold’s upside could be capped at $1,800, according to market analysts. Rupert Rowling School at Kinesis Money.
The USD index rose 0.8%, making gold more expensive for buyers in other currencies.
In the spot gold market, gold prices rose in China this week on safe-haven demand amid growing tensions with the US over Taiwan.
Copper continues to recover
Copper prices continued to recover as fears of a global recession eased after strong US jobs data and investors focused on low reserves and threats to supply.
Three-month copper on the London Metal Exchange (LME) rose 1.8 percent to $7,869 a tonne.
The US Comex rose 1.9% to $3.55/lb.
Copper has recovered from three days of losses earlier this week as global manufacturing data weakened and US-China tensions flared up following a visit to Taiwan by US House of Representatives Speaker Nancy Pelosi.
The Chinese government is pumping stimulus spending into the economy and launching infrastructure projects to boost economic growth.
Most of LME’s reserves are at historic lows. Copper stocks stood at 128,600 tons, down nearly 30% since mid-May.
Iron ore recovery
Iron ore prices rose, with the Singapore contract recovering from a five-day loss, as a rebound in steelmaking profits in China eased concerns about weakening demand for the steelmaking component.
However, for the whole week, iron ore still fell due to worries about China’s real estate sector, restrictions on Covid-19, steel production cuts and Sino-US tensions over Taiwan.
The September iron ore contract in Singapore rose 3.6% to $109.55 a tonne after hitting its lowest since July 25 at $104.7 in the previous session.
On the Dalian Commodity Exchange, the January 2023 futures contract closed up 2.6% to 723 CNY ($107.18)/ton.
Steel stocks held by traders in 132 Chinese cities surveyed by consulting firm Mysteel as of August 4 fell 603,700 tonnes from the previous week to 20.3 million tonnes, a six-month low. Stockpiles at China’s 184 steel mills fell for the sixth week of the week from July 28 to August 3 to 4.76 million tons.
Bar steel in Shanghai rose 0.2%, hot rolled coil increased 0.3% and stainless steel increased 0.1%.
Stable Japanese rubber
Japanese rubber prices stabilized, as Tokyo shares and Shanghai markets rose, although continued worries about slowing demand in China weighed on sentiment and limited gains.
Rubber contract for delivery in January 2023 on the Osaka exchange closed up 0.1 JPY to 227.7 JPY (1.71 USD)/kg. For the whole week, this contract decreased by nearly 4%.
On the Shanghai exchange, the price of rubber for September delivery increased by 25 CNY to 12,080 CNY (US$1,790)/ton.
There are recent concerns about slowing rubber demand in China because of the impact of the prolonged lockdown to limit the Covid-19 outbreak on industrial activity and consumption.
Toyota Group profits fell 42%, stronger than expected in the first quarter, due to limited supply and rising costs.
Corn up, soybean and wheat down
U.S. soybean prices fell for a fourth session in five, as light rain forecast in the Midwest could boost crop growth at a critical period. Maize was strong on technical indicators while wheat fell as traders watched the progress of exports from Black Sea ports.
CBOT November soybeans closed down 9 US cents at 14.08-3/4 USD/bushel.
CBOT corn for December term closed up 3-3/4 US cents to 6.1 USD/bushel.
Three cargo ships carrying a total of 58,041 tons of corn were allowed to leave Ukraine’s ports on August 5 as part of a deal to clear grain exports.
CBOT September wheat futures fell 6-3/4 US cents to 7.75-3/4 USD/bushel.
Sugar prices increase
Raw sugar for October futures closed up 2.3% to 17.95 US cents/lb.
Dealers said selling of funds had eased recently, prompting sugar prices to begin to recover after falling to a one-year low of 17.2 US cents earlier in the week.
White sugar in the same period increased 4.4% to 550.9 USD/ton.
India will allow additional exports of 1.2 million tonnes of sugar.
Mixed coffee
September Arabica coffee futures fell 4.5% to $2,0945/lb.
Dealers said concerns that a global recession could curb coffee consumption weighed on prices, while a stronger dollar also weighed on prices.
However, this market is still underpinned by falling inventories.
Robusta coffee for November delivery increased by 1 USD, or 0.05%, to 2,042 USD/ton.
Prices of some key items on the morning of August 6:
