Oil

IN the New York market, US crude rose by about a dollar a barrel on March 7, on jobless claims falling unexpectedly in the United States and a weakening dollar. Meanwhile, while Brent crude dropped slightly after a North Sea pipeline restarted after a shutdown.

Brent crude for April delivery fell 16 cents to $110.90 per barrel. US West Texas Intermediate crude rose by 99 cents a barrel to $91.42, driving Brent’s premium to WTI down to $19.36, from $20.63 a barrel on March 6.

On March 6, West Texas Intermediate oil fell for the fourth time in five days, after a government report showed that US inventories rose more than forecasted a week earlier. Prices dropped 0.4 per cent after the Energy Information Administration said supplies had risen to 3.83 million barrels. Refineries operated at the lowest rate in almost a year, reducing demand for crude to process into fuels.

WTI for April delivery declined 39 cents to settle at $90.43 a barrel on the New York Mercantile Exchange. Futures dropped to as low as $89.55 a barrel, after the inventory report was released. Prices have tumbled 14 per cent in the past year. Brent for April settlement fell 55 cents, or 0.5 per cent, to $111.06 a barrel on the London-based ICE Futures Europe Exchange. Volume was 27 per cent above the 100-day average.

Oil stockpiles rose to 381.4 million barrels in the week ended March 1, the most since June 29, the EIA, the energy department’s statistical arm, reported. Supplies at Cushing, Oklahoma, the delivery point for WTI, gained 257,000 barrels to 50.8 million.

Refinery utilisation decreased 2.9 points from the previous week to 82.2 per cent, the lowest since March 16, 2012. Oil also fell, as the euro weakened by as much as 0.5 per cent to $1.2983. A weaker euro and a stronger dollar reduce oil’s appeal as an investment alternative.

US crude imports from Venezuela, the fourth largest Organisation of Petroleum Exporting Countries (Opec) producer, totaled 549,000 barrels in the week ended February 22, down 44 per cent from a year earlier, showed EIA data. US domestic output rose to as high as 7.12 million barrels a day in February, the most since 1992. But the output later slipped to 7.09 million barrels a day, 15 days back, the EIA reported.

Meanwhile, Venezuela pumped out 2.38 million barrels of oil a day in January, Opec said. That put the country sixth in the group in terms of production, behind Saudi Arabia, Iraq, Kuwait, Iran and the United Arab Emirates. The country used to produce as much as 3.52 million barrels a day of oil in 1997, according to the EIA. But its oil output declined since Hugo Chavez became president in 1999, and fell as low as 2.38 million barrels in 2010.

Venezuela’s oil industry was operating normally on March 5, and no disruptions were expected following the death of President Chavez, the state oil company, PDVSA, said.

Venezuela is the world’s 11th largest crude exporter, a top-four supplier to the United States and an increasingly important fuel source for China. In 2011, Opec said the nation had overtaken Saudi Arabia as the country with the world’s biggest crude reserves. PDVSA said all its installations – including the Paraguana Refining Center, the second-largest in the world – were operating normally and domestic fuel supplies were guaranteed. Key operations would likely continue much as they have done, with joint ventures with Chevron and Spain’s Repsol in the Orinoco belt adding a small amount to current output of around 3 million barrels per day.

Wheat

THE global wheat harvest may climb 4.3 per cent from the previous season, reaching the second highest on record, as European farmers expanded acreage while yields rebounded in Russia, the United Nations’ Food and Agriculture Organisation said. World output may total 690 million metric tonnes this year, compared with 661.8 million tonnes a year earlier, the Rome-based FAO said. The harvest would be second only to the 2011 record. Wheat planting in the European Union may be about higher by about three per cent than the year before, and weather conditions have been “generally favourable.” Ukraine may also see a “large recovery” in output after satisfactory winter conditions, the FAO said. Russia and Eastern Europe had dry weather last year.

Wheat futures rose as much as 0.9 per cent on March 7, to $6.8975 a bushel on the Chicago Board of Trade, after having slid to an eight-month low a day earlier. The grain, the best performing commodity in 2012 on the Standard and Poor’s GSCI gauge of 24 raw materials, is down 11 per cent in 2013. In Paris, milling wheat futures have dropped 6.5 per cent this year on NYSE Liffe. China and Pakistan may have record wheat crops in 2013, and India is set for a “bumper harvest,” the FAO said. Production in the US, the world’s largest wheat exporter, may drop by as much as six per cent because of drought in the southern Great Plains. Australia also faces uncertainty before planting begins in April, as hot weather has reduced soil moisture.

Corn production in Brazil in 2013 may be nine per cent higher than last year, because of ample rainfall, which allowed planting of the second-season crop to progress under favorable moisture conditions, the FAO said. Argentina’s crop may rise to a record 25.5 million tonnes, as yields recover from drought in the previous season, making up for an eight per cent drop in planting. More rain is needed in the country to maintain yields. Corn production in South Africa may be near a record, at more than 13 million tonnes, the FAO said.

Gold

IN the London market, gold prices slipped on March 7, after the European Central Bank (ECB) gave no clear hints of further monetary easing, and the Bank of England opted not to restart its gilt purchases. A weakening dollar only offered limited support.

Spot gold was down 0.4 per cent at $1,577.60 an ounce, while US gold futures for April delivery were up 0.1 per cent to $1,576.90. Spot gold has fallen nearly six per cent so far this year, and is down about 18 per cent from a record high of $1,920.30 an ounce in September 2011.

In Sydney, gold futures gained on March 7, ahead of two central bank meetings in Europe that could see support for policy easing to spur economic growth. Gold for delivery in April rose by $8.30 to $1,583.20 an ounce. The precious metal ended little changed in New York on March 6, ahead of the policy meetings at the European Central Bank and the Bank of England.

After the Comex trading session ended on March 6, the Federal Reserve’s Beige Book showed that the government’s fiscal and healthcare policies are holding back private spending and hiring. It had been expected to show that the economy limped along in early 2013.

Decisions at other central banks, which could also potentially support gold prices, were also in focus. The Bank of Japan kicked off by leaving its monetary policy on hold, as was widely expected ahead of a leadership handover set to take place later this month.

Investors are selling gold exchange-traded funds (ETFs) at record pace, as a sharp rally in equities dampens appeal for the precious metal. ETFs, which accumulate physical gold and then issue shares, have become one of the most popular ways to invest in the bullion since they were first launched a decade ago. By providing investors with an easy and cheap way of trading the metal, they have helped spur a wave of gold buying that pushed its price up more than seven-fold, to a record $1,920 a troy ounce in 2011. But as the gold price slid to less than $1,600 amid signs of a global economic recovery, investors have begun to sell their shares in gold funds. ETFs dumped 106 tonnes of bullion in February, the largest monthly outflow on record, according to Bloomberg data. Since the start of January, gold ETF holdings have fallen 140 tonnes.

In value terms, gold demand in 2012 was US$236.4 billion – an all-time high. Gold demand in value terms for the final quarter of the year was six per cent higher year-on-year, at US$66.2 billion, marking the highest ever Q4 total.

Global gold demand in Q4 2012 was 1,195.9 tonnes, up four per cent from the same quarter in 2011. In Q4 2012, the average gold price reached a record level of US$1,721.8/oz, up one per cent on the previous record average price in Q3 2011. The average price during 2012 was US$1,669.0/oz, up six per cent from US$1,571.5/oz in 2011.

Copper

In the London market, copper prices rebounded on March 7, lifted by a strong euro and better than expected US data that boosted the outlook for growth. However, investors also fretted about demand in the world’s top metals consumer, China.

Three-month copper on the London Metal Exchange closed one per cent higher at $7,765 a tonne, after having shed one per cent on March 6.

Although copper has rebounded off its three-month low, prices are still trading 1.9 per cent lower in the year to date period, after the metal, which is widely used in power and construction, had shed more than four per cent in February.