OIL & GAS REBOUND, WHEREAS PRECIOUS METALS SHINE
WTI crude futures rose more than 3% to above $81 a barrel on Friday, supported by strong data and as OPEC+ producers rebuffed a US call to increase output. On Thursday, OPEC+ agreed to stick to the plan of raising oil output by 400,000 barrels per day from December despite pressure from the Biden administration to pump more oil. Meanwhile, the US economy added 531K jobs in October of 2021, the most in 3 months and above market forecasts of 450K showing US economic recovery is gaining ground again. Still, oil is heading for an over 3% weekly loss amid rising US crude inventories and after the White House said it will consider the full range of tools to bring prices down.
US natural gas futures traded slightly below $5.6 per million British thermal units, after rebounding from a near two-week low of $5.3 hit on November 1st, in line with the European and UK contracts, as domestic stockpiles expanded at a softer pace while an ongoing global energy crunch kept fueling US exports. EIA natural gas stockpiles increased by 63 billion cubic feet last week, as expected, slowing from an 87 bcf addition in the previous period. Elsewhere, jitters over the natural gas shortage in Europe remained heightened after supplies from Russia decreased, as seen through the decline in shipments headed to Poland and lower flows passing through Ukraine. Other upside risk factors include the pending approval of the Nord Stream 2 pipeline, which Russia says could ease the crisis in Europe, and concerns that colder-than-usual winter temperatures could deplete European stockpiles this year.
Heating oil futures firmed above $2.4 per gallon, close to a seven-year high of $2.59 hit on October 20th, supported by a tight market outlook. At its latest meeting, OPEC+ nations decided to raise oil output by 400,000 barrels a day in December, as widely expected, despite pressure from the US President, whom criticized the group for driving the recent surge in energy prices. Still, gains were capped by an unexpected build up in distillate stocks, which include heating oil, after EIA figures showed an addition of 2.16 million barrels in domestic stockpiles.
US gasoline futures steadied around $2.3 per gallon, not far from a 7-year high of $2.52 hit on October 26th, as the outlook for global oil supply and tightening inventory levels keep supporting prices. On November 4th, OPEC and allies decided to stick to the 400,000 bpd output increase in December, despite mounting international pressure to ease the energy crisis. Meanwhile, government data showed gasoline inventories fell by 1.488 million barrels in the October 29th week, a fourth consecutive period of declines and slightly above market expectations of a 1.333 drop.
Gold prices held firm above $1,790 an ounce on Friday, and are on course for a weekly gain after a succession of central banks this week defied expectations of a hawkish pivot. The Bank of England surprised markets by keeping interest rates unchanged at record lows and the Federal Reserve signaled no rush in hiking fed funds saying the current surge in inflation is expected to be transitory. Meanwhile, recent data showed the US economy added more jobs than expected in October.
Silver prices traded in a range close to $24 per troy ounce on Friday, little changed from the beginning of the week after rebounding from a 2-week low on Wednesday. Appetite for non-yielding assets such as precious metals returned.the precious metal pointed towards a 0.4% gain.
