Oil

IN the New York market, Brent crude futures climbed above $101 a barrel on July 12, as the US government’s announcement that it was tightening sanctions against Iran, sparked a rally back from early losses on global economic worries. After Brent crude shifted higher, US crude followed suit and US gasoline futures shot up more than 1 per cent, tracking global benchmark Brent futures. In London, Brent crude futures for August delivery settled at $101.07 a barrel, up 84 cents. It shot up to a session high of $101.36 a barrel, moving toward its 50-day average of $101.86.

A day earlier oil fell in New York on concern that global demand may falter after South Korea unexpectedly cut interest rates. Australia’s jobless rate rose and economists said European manufacturing stagnated last month.

Futures slid as much as 0.9 per cent. Prices surged 2.3 per cent after an Energy Department report showed a bigger-than- expected drop in US crude stockpiles. Gasoline inventories rose almost six times as much as forecast and fuel use declined, the report also showed. Industrial output in the euro area was probably unchanged in May from April.

Crude for August delivery declined as much as 80 cents to $85.01 a barrel in electronic trading on the New York Mercantile Exchange. It was at $85.14 in London. The contract on July 11 climbed $1.90 to $85.81, the highest close since July 9. Prices have decreased 14 per cent this year.

Brent oil for August settlement on the London-based ICE Futures Europe exchange slid as much as 88 cents, or 0.9 per cent, to $99.35 a barrel.

The European benchmark contract was at a premium of $14.29 to New York-traded West Texas Intermediate grade.

The International Energy Agency forecasts faster growth in world oil demand next year as the global economy recovers, in contrast to the slower expansion that Opec projected in a report last week.

Oil consumption will increase by a ‘relatively muted’ 1 million barrels a day, or 1.1 per cent, to an average of 90.9 million a day in 2013, the Paris-based adviser said in its first outlook for the coming year. That’s a higher growth rate for next year than the 800,000 barrels a day that the Organization of Petroleum Exporting Countries estimated on July 11. Demand in emerging economies will surpass that of developed nations for the first time in 2013, the IEA forecasts.

In the Singapore market, Brent crude slipped below $100 per barrel on July 11, after a more than 2 per cent rally in the prior session, as uncertainty over whether the US Federal Reserve would launch more stimulus measures curbed investor appetite for riskier assets.

Investors are awaiting China’s GDP data due on July 13 to make a fresh assessment of global oil demand growth, after producer group Opec forecast another slowdown for 2013. Asian shares and base metals also slipped in part due to caution ahead of growth numbers from the world’s second-biggest economy.

The Organisation of the Petroleum Exporting Countries (Opec), which produces a third of global oil, expects oil demand growth to slow in 2013 from the already weak 2012 on Europe’s debt worries, a faltering economic recovery in the United states and slower growth in emerging markets.

The grim outlook for the global economy, already roiled by the festering debt crisis in the euro zone, has muddied the demand outlook for most commodities. Oil has been hit hard, with prices suffering their largest three-month drop since the 2008 financial crisis in the second quarter.

Oil prices have rebounded from their June lows of below $90 for Brent and around $77 for US crude as investors pumped in money after a debt deal in Europe sparked a buying frenzy across commodities.

Global oil consumption will rise by an average of 900,000 barrels a day this year, or about 1 per cent, Opec projected in its monthly report.

Growth will slow in 2013 to 800,000 barrels a day as the economy cools, according to the 12-member group’s first assessment for next year.

Markets will be “comfortable” because of increased production by non-Opec members, the report showed. Opec, which accounts for about 40 per cent of global supplies, said it will need to provide an average 29.6 million barrels a day in 2013. That’s 300,000 barrels less than this year and about 1.8 million below current production rates.

Gold

IN the London market, gold fell one per cent on July 12 as the Federal Reserve’s recent meeting gave no indication that US policymakers were gearing up for additional action to stimulate growth, lessening the chances of a boost to the bullion price. Spot gold was down at $1,556.06 an ounce. The price has fallen by 1.6 per cent so far this week, marking its second consecutive weekly decline.

The prospect of no immediate Fed policy response delivers gold a twin blow: first from the ensuing strength of the dollar, which boasts more yield-appeal for investors when rates are not expected to fall further, and second from the lower chance of the extra liquidity that tends to favour gold. The gold prices has more than doubled in value since the Fed initiated its multi-trillion dollar bond-buying programme, known as quantitative easing, in late 2008 during the depths of the global financial crisis.

In the last 10 weeks, the gold price has struggled to break free of a $1,630-1,550 range and last week has traded in its narrowest band since late April, with less than $40 between intraday highs and lows, compared with a weekly average of nearly $84 so far this year.

Earlier in the New York market, gold ended nearly flat on July 10 after the metal pared early gains on signs that US economic recovery might need to weaken further for Federal Reserve policymakers to unanimously agree on more stimulus.

Bullion trimmed gains as the dollar rose after the minutes of the Fed’s June meeting showed that a few officials on the policy-setting Federal Opec Market Committee thought recent softness in the economy was sufficient to justify bolder action.

The precious metal currently hovered near its one-year low, and analysts said more losses could be in store on technical weakness. Spot gold was up 0.1 per cent on the day at $1,568.64 an ounce.

US COMEX  August gold futures settled down $4.10 at $1,575.70 an ounce, narrowing the difference between the futures price and spot gold.

Trading volume was about 20 per cent below its 30-day average. The metal had dropped 3 per cent in the last four sessions on signs of global economic slowdown and frustrations over a lack of more monetary easing by the US central bank.

Gold is just $40 above its one-year lows near $1,530-1,540 an ounce, and analysts said a failure to hold that support level could lead to a steep price correction. Meanwhile, lacklustre investment demand in gold failed to underpin prices.

Gold’s fortunes this year have largely depended on the Fed’s attitude towards monetary easing and its impact on the dollar. The greenback and bullion typically move in opposite directions and lately the dollar has trumped gold as the preferred safe-haven bet. The dollar stood close to a two-year high against a basket of major currencies, having pushed the euro to a two-year low after minutes from a Federal Reserve meeting dashed hopes of policy easing moves anytime soon.

Credit Suisse cut 2012 gold price forecast to $1,680 an ounce from its prior forecast of $1,765. Growing concerns about debt deflation and improving growth prospects in the global economy are the two scenarios in which gold would perform poorly, the bank said. The bank also lowered its silver price forecast to $30.50 from $33.50. Spot silver lost 0.7 per cent to $26.88.

Copper

IN the London market copper edged up on July 12, recouping earlier losses but with markets cautious ahead of the second-quarter growth figures from top consumer China and after the US Federal Reserve dashed hopes of further stimulus measures in the short-term. Benchmark copper on the London Metal Exchange (LME) ended at $7,555 a tonne from a close of $7,540 on July 11. The metal earlier hit a day low of $7,465.75 and is on track for a near 2 per cent loss over the past two weeks.

China has already seen a double-digit fall in its copper imports last month and LME copper has shed close to 9 per cent in the second quarter, as uncertainty about the pace of global economic growth raised concerns about industrial metal demand.

Adding to the cautious tone in the wider markets was a surprise rate cut in South Korea, following a 50-basis-point cut by Brazil, which together underscored the growing impact the slowdown in top economies was having worldwide.

Copper prices have rebounded from six month lows of $7,233.25 a tonne hit one month ago, and are down one per cent on the year. with trade already thinned by summer in Europe, where much of industry shutters for a long summer break, metals prices were at risk of falling further, if support from the euro failed to hold, traders said.