Oil tumbled to a five-week low on Monday as last week’s parade of negative news, notably the US jobless rate hitting its highest level in 26 years, continued to eat away investor enthusiasm for commodities.

Data last week showing Eurozone unemployment rose to a ten year high further undermined the idea of a swift global economic recovery, with confidence in the market also knocked by the revelation that the large spike in oil seen last Tuesday was the work of unauthorised positions taken by a trader at the brokerage PVM.

Nymex August West Texas Intermediate, the US benchmark oil futures contract, fell $2.72 to $64.01 per barrel, while ICE August Brent lest $1.71 to $63.90 a barrel.

WTI is now down 13.2 per cent from the eight month high reached last week in the wake of the PVM trades.

“A sharply lower equity market was undoubtedly the driver [for lower prices] and combined with the US dollar this is likely to continue to offer guidance for the energy complex,” said Marius Paun of ODL.

“While the decline could have been exacerbated by the pre–holiday position squaring it seems that the balance is slowly starting to shift with bears getting stronger again.”

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Oil slipped further on Friday amid light trading as bleak US jobs data continued to weigh on the market.

Crude dropped almost 4 per cent on Thursday after closely watched non-farm payrolls data showed the jobless rate in the world’s largest economy hit a 26-year high, dashing latent hopes that commodities would continue to rally on the back of a sharp global economy.

The US Independence Day holiday meant the US market was closed and volumes of West Texas Intermediate trades were at a minute fraction of their normal level.

“We have repeatedly warned that the bullish market sentiment was overdone,” analysts at Commerzbank said. “We also believe that the market needs to be positively surprised, in order to maintain current price levels”.

Nymex WTI for August delivery fell 25 cents to $66.48 a barrel, meaning the US benchmark has now fallen almost 10 per cent since rising to an eight month high overnight on Tuesday. ICE August Brent shed 23 cents to $66.38.

Base metals also dropped, with copper losing 1 per cent to $4,985 per tonne, and aluminium falling 0.3 per cent to $1,634 per tonne.

Gold however recovered a small amount of ground, rising 0.2 per cent to $934.3 a troy ounce, as the US dollar weakened slightly, thus boosting the appeal of the dollar denominated yellow metal.

Oil fell on Thursday as the market continued to digest US government data showing a large increase in petrol stocks, increasing worries that consumer demand was flagging and the energy markets had been overbought.

Crude sagged as investors across most asset classes adopted defensive stances after closely-watched US non-farm payrolls data showed unemployment in the world’s leading economy fell more than expected.

Data on Wednesday from the Energy Information Agency, the statistical arm of the US Department of Energy showed crude inventories fell for the fourth consecutive week but this was overshadowed by the sharp rise in petroleum products.

Nymex August West Texas Intermediate, the US benchmark, fell $1.40 to $67.87 a barrel. ICE August Brent fell $1.35 to $67.43 a barrel.

“We see prices as being likely to stay largely within the $65-75 range in the current quarter, with brief forays possible either side of that range, and have adjusted price forecasts to reflect that core view,” said Barclays Capital.

“The main dynamic within the US data recently has been one whereby the overhang of crude oil inventories is being turned into a greater overhang of oil product inventories. Indeed, that dynamic has been the reason why we have remained wary of long exposure to product cracks in recent weeks and have preferred long crude but short products”.

Base metals meanwhile were broadly weaker ahead of the US data. Copper fell 2.9 per cent to $4979 per tonne and aluminium was down 1.9 per cent to $1633 per tonne.

Gold slipped as the dollar strengthened and reduced the relative value appeal of bullion. Spot gold lost 1.4 per cent to $929.10.

Oil hit an eight month high on Tuesday and was on track to post its largest quarterly gain since 1990 as optimism for an economic recovery rather than clear news flow continued to drive crude prices.

The energy market defied predications of a quiet US holiday trading period as US crude again broke through the $72 a barrel level, adding to a 3.7 per cent rise in the previous session.

“Crude posted a strong advance yesterday proving that among all those warnings of a cautious approach, optimism about the economic outlook is still making headlines,” said Marius Paun of ODL. “The employment report on Thursday is likely to be the main influencing factor for the energy complex offering guidance on the short term.”

A softer dollar added to crude’s upward momentum, with a weaker greenback boosting the appeal of dollar-denominated commodities such as oil and gold.

Nymex West Texas Intermediate futures for August delivery, the US benchmark, rose 56 cents to $72.03, while ICE August Brent gained 66 cents to $71.65.

Earlier WTI hit $73.38 a barrel, the highest level since late October last year.

Spot gold rose 0.4 per cent to $940.50 a troy ounce, the sheen of the yellow metal enhanced by the dollar’s falls, while base metals were broadly stronger.

“Gold has stabilised against the euro over the past few sessions, recovering from a plunge at the start of last week, but sill in an overall lower trend from recent highs at the start of June,” said analysts at UBS.

Copper rose 0.8 per cent to $5143 per tonne, with aluminium up 0.7 per cent to $1651a tonne.

Oil prices rose on Monday as the market shrugged off a bearish report from the International Energy Agency, opting instead to focus on news of further attacks on Nigeria’s energy infrastructure by militants.

The IEA, the oil consuming countries’ watchdog, sharply lowered its medium-term forecast for global oil demand, suggesting that economic fundamentals will prevent a repeat of crude’s surge towards $150 last year.

The IEA lowered its 2008-2013 demand forecast by 3.7 per cent compared with its previous estimate in December, but stressed that the chances of an oil shock had only lessened rather than disappeared altogether. Continue reading "Oil rises in spite of IEA cut in its demand forecasts"

Oil rose back towards the $69 mark on Thursday as further attacks on pipelines in Nigeria by militants helped reverse losses caused by a sharp jump in US fuel stocks.

Crude had dipped on Wednesday after weekly US supplies data showed gasoline stocks hit 3.9m barrels as refiners ramped up production ahead of the peak summer driving season, and distillates stocks rose to the highest level in over 10 years.

Gasoline and distillate’s relative abundance was somewhat offset by a 3.8m barrel drop in crude stocks but this, and an increase in refinery utilisation, failed to reassure many observers.

Commerzbank analysts wrote:

“The steep increase in gasoline stocks over the past weeks indicates that the underlying demand is weak and that more crude oil is being processed than there is actually demand for.”

“The American Automobile Association estimates that US holiday travel during the upcoming long Independence-Day weekend will be 1.9 per cent below last year’s level. Car travel is even expected to fall 2.6 per cent year on year. Hence, the latest decline in US crude oil inventories does not necessarily signal an improvement in the fundamental situation of the oil market [and] the oil price remains vulnerable to further declines.”

News of a raid on a Niger Delta pipeline by the principal militant group in Africa’s biggest oil exporter helped provide some support to crude prices.

The Movement for the Emancipation of the Niger Delta, the largest and most active Nigerian militant organisation targeting the country’s refining infrastructure, said it had attacked the Billie/Krakama pipeline linked to the Bonny crude terminal, one of Nigeria’s largest export points.

Years of attacks on the Nigerian oil industry have hampered production, meaning output has dropped to around two thirds of a total capacity of close to 3m barrels a day.

Nymex August West Intermediate, the US benchmark blend, rose 27 cents to $68.63, while ICE August Brent, the European oil standard, rose 45 cents to $68.78.

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Oil slipped back below $70 a barrel as a firmer dollar lessened crude’s lustre for investors using other currencies.

A new wave of attacks on oil installations in Nigeria, Africa’s largest exporter, and continued political unrest in Iran failed to anchor prices.

Nymex July West Texas Intermediate, the current US front month contract which expires later today, shed $1.20 to $68.35. Taking its place, and with a far larger current open interest, the Nymex contract for August delivery lost $1.24 to $68.78. ICE August Brent crude fell 92 cents to $68.27 a barrel.

Gold fell back 0.8 per cent to $925.55 a troy ounce, with dollar strength also contributing to downward pressure on the spot market price.

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Oil prices rose back towards the $72 a barrel mark on Friday, with bullish sentiment bolstered by yesterday’s improved US economic data and continued supply concerns in Nigeria.

Oil futures, which many investors have been purchasing to gain exposure to a recovery in global economic activity, ticked upwards yesterday after an influential business activity index from the Philadelphia Federal Reserve posted its highest reading since before the collapse of the investment bank Lehman Brothers sent shock waves through global markets last September.

Attacks on pipelines by militants in Opec member Nigeria, through not widely seen as market moving news, helped to provide a reminder to energy traders of political risk factors alongside the ongoing election dispute in Iran.

Nymex July West Texas Intermediate oil, the US benchmark, rose 68 cents to $72.05, while the August contract rose 72 cents to $72.63. ICE August Brent, its European equivalent, gained 74 cents at $71.80.

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