Oil futures gave up earlier gains on Thursday, with downbeat comments from Federal Reserve officials on economic activity and doubts over producer compliance with the OPEC-led production cuts agreement.
As a result, the price settled lower prompting prices to settle lower for the second day in a row.
News that another 3.2 million Americans applied for unemployment benefits last week – taking the total to 33.5 million – added to the pressure on oil.
Traders said prices had spent much of the session trading higher, buoyed by Saudi Arabia’s decision to lift prices, while April trade data showed China’s appetite for oil remained solid.
Media reports said Saudi Arabia is raising crude prices for its customers worldwide in an attempt to try and put a floor under prices.
Three Federal Reserve district bank presidents said that they don’t expect a quick rebound in economic activity even as states start easing COVID-19 lockdown measures.
“I think…for the country the short-term outlook is really bleak,” Minneapolis Fed President Neel Kashkari (a noted bear at the moment) said.
“No one who I talked is looking at a V-shaped recovery, they really think this will be gradual and it will take time to build confidence back up for both workers and consumers,” San Francisco Fed President Mary Daly said in an interview with Bloomberg.
So the West Texas Intermediate crude for June contract fell 44 cents or 1.8% on Nymex in New York to $US23.55 a barrel after trading as high as $US26.74. It continued falling after hours and was down 3% just before 6 am Sydney time.
In Europe, the July Brent crude contract lost 26 cents, or 0.9%, settling at $US29.46 a barrel.
Gold meanwhile jumped sharply back over the $US1,700 level as traders grabbed the new US plans to borrow $US3 trillion this quarter (in mostly long-dated securities).
Comex June gold leaped $US37.30, or 2.2%, to settle at $US1,725.80 an ounce, in New York even as shares rose.
Gold was also boosted by the 3.2 million gain in US jobless numbers ahead of the April jobs report tonight.
Some 33.5 million people have now filed jobless claims in the US in the past seven weeks, pointing to a jobless rate as high as 20%.
Comex July silver rose 57.5 cents, or 3.8%, to $US15.59 an ounce.
In other metals trading, Comex July copper rose 1.4% at $US2.3805 a pound after China’s April trade data revealed a big rise in imports of copper metal and concentrates (which topped 2 million tonnes alone last month, only the third time ever that level has been reached, according to Reuters data).
Globally, gold-backed ETFs (Exchange Traded Funds) continued to soak up the metal last month, adding 170 tonnes and lifting total holdings to a new all-time high of 3,355 tonnes, according to a report from the World Gold Council released Thursday.
“Continued record growth for gold-backed ETFs, despite some rebound in other asset classes, highlights that investors are embracing gold’s role as a store of value and source of liquidity and returns,” Juan Carlos Artigas, head of research at the World Gold Council, said in a report.
