Oil prices rose on Monday after Saudi Arabia increased its June crude prices for key regions and the possibility of a Gaza ceasefire diminished, while gold prices also ticked up.
Both oil futures posted their steepest weekly loss in three months last week, with Brent (CO1:COM) falling more than 7% and WTI down 6.8%, as investors weighed the possible timing of a Federal Reserve interest rate cut.
“News that Israel wants to go ahead and extend its operation into Rafah, risks derailing a potential ceasefire agreement and reigniting Middle Eastern geopolitical tensions which had appeared to be easing,” IG markets analyst Tony Sycamore told Reuters.
With most of the long positions in oil cleared last week, the risks appear to be for WTI prices to rebound back towards $80 in the early part of this week, he added.
Data showing a second straight significant weekly drop in the number of active U.S. oil rigs provided little support for oil prices Friday, even if the decline implies a potential slowdown in future production.
Meanwhile, Saudi Arabia and its allies in OPEC+ are likely to keep oil production unchanged for a further three months when ministers review output allocations on June 1.
In the precious metals market, gold prices ticked higher, along with silver, platinum and palladium, as investors positioned for a slew of Fed speakers this week, with investors betting on an eventual rate-easing cycle this year. Gold ended last week in red amid the fallout from the recent FOMC meeting.
On the day, gold (XAUUSD:CUR) climbed +0.85% to $2,320.91, while silver prices (XAGUSD:CUR) advanced +2.31% to $27.16.
Elsewhere, U.S. earnings on the whole, been strong and company guidance generally bullish, the Fed appears reluctant to raise rates again and signs of softer economic data are keeping hopes of rate cuts this year alive.
Lower interest rates tend to make zero-yield gold more appealing.
“Resilient gold bulls cut their extended net longs by 5% only to 167k contracts, as the metal continued to find support well above levels that otherwise could trigger accelerated long liquidation,” Saxo Bank’s Ole Hansen said in a note.
“Additional copper strength yielded increases in both long and short positions, potentially signalling a short-term top in the market,” he added.
According to ANZ Research, shifts in the macroeconomic backdrop left the market in two minds for most of last week. However, elevated supply risks continued to provide a strong level of support for energy and metal markets.
Recent Commodity Price Movements and A look At Some ETFs
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Energy
Metals
Agriculture
Commodity ETFs
Gold ETFs:
Other Metal ETFs:
Oil ETFs:
Agriculture ETFs:
