Gold Moves Higher But Rising Rig Count Puts Oil Under Pressure

By Glenn Dyer | More Articles by Glenn Dyer

Oil fell, gold, silver, and copper rose and iron ore finished higher on the first day of active trading after the Chinese holiday period.

The price of 62% Fe Fines delivered to northern China edged up $US2.25 or 1.8% to end at $US125.72 a tonne from the close 9 days earlier on September 30.

The rise came despite the start of restrictions on sintering (the compacting of steelmaking materials) activities in a number of northern Chinese steelmaking cities ahead of the coming winter and smog period.

The bans restrict the process and will curtail crude steelmaking in those cities. It is a normal late autumn and winter situation in China’s steelmaking regions.

The rise in the iron ore price also came as the Chinese yuan saw its biggest rise in 17 months on Friday while the US dollar lost 0.8% against a group of six major currencies.

The easing greenback had no impact on oil futures which settled lower Friday following a reported end to a strike in Norway that threatened production.

Traders also worried about the impact of Hurricane Delta which came ashore in Louisiana on Friday night as a category 2 storm with little serious damage.

But fears about the impact of the storm (which shut 92% of the oil-producing wells in the Gulf) and the wage dispute in the Norwegian industry nevertheless saw oil prices up nearly 10% for the week.

West Texas Intermediate crude for November delivery fell 59 cents, or 1.4%, to settle at $US40.60 a barrel in New York. For the week, the front-month contract gained 9.6%.

In Europe December Brent crude fell 49 cents, or 1.1%, to settle at $US42.85 a barrel for a gain of 9.1% for the week.

Meanwhile, activity in US oil producing regions is slowly rebounding.

Services group Baker Hughes on Friday, reported a third straight weekly increase in the number of oil rigs in active use – a rise of 4 to 193.

The total active US rig count, meanwhile, was up 3 to 269. (That’s down 587 from a year ago).

The total rig count fell to a record low of 244 rigs during the week ended August 14.

Meanwhile, Comex gold futures ended at a three-week high on Friday above $US1,900 an ounce as the US dollar lost ground and investors still believed the stimulus fairy would come out to play in Washington if disagreeing democrats and Republicans would only crack a few heads.

Judging by the argy-bargy and odd comments added to the debate from President Trump, no one ones what will happen.

The Republicans know they can’t get a huge stimulus bill of the size the Democrats want ($US1.8 trillion) through the Senate they control, let alone a larger one that president trump hinted at in comments on Friday night.

Comex December gold jumped $US31.10, or 1.6%, to settle at $US1,926.20 an ounce, up 1% higher for the week.

Comex December silver advanced $US1.23, or 5.2%, to $US25.108 an ounce, for a weekly rise of 4.5%.

Among other metals, Comex December copper rose 1.3% to $US3.0825 a pound, for a solid weekly rise of 3.5%.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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