Commodities were no different to equities last week as Omicron and interest rates dominated and this week will be the same, with more reminders of the dangers from inflation and the outcome for monetary policy in the US, Australia and China.
Oil prices led the way in reacting negatively to all influences as they again fell as the Omicron variant popped up almost everywhere in the world – by week’s end the variant was in more than 40 countries, double what it was earlier in the week.
Serious infections had taken hold in Sydney, in parts of the US, UK, Europe and in Southern Africa.
While the OPEC+ group confirmed its intention to increase production by 400,000 barrels a day from next month, that decision was overtaken by growing fears that the new variant could damage the expected recovery in demand in 2022.
The OPEC+ meeting remains open – meaning that if the new variant hits demand quickly the decision could be quickly reversed. But the actual decision looked more like an attempt to stave off any big release of oil from national strategic reserves in countries like the US and China.
US West Texas Intermediate (WTI) oil futures fell about 1% to below $US66 a barrel, registering their sixth straight weekly retreat, the longest such losing streak since 2018.
Brent futures rose 21 cents, or 0.3%, to settle at $US69.88 a barrel, while WTI crude ended 24 cents, or 0.4%, lower at $US66.26 after touching a day’s low of $US65.60.
For the week, Brent was down 2.4% and WTI 2.7%.
It was a sixth losing week in a row for both benchmarks which was the first time since November 2018. Analysts say both remain in technically oversold territory for a sixth straight day for the first time since September 2020. The bears still have the upper hand.
The US jobs report had no impact on oil – the other factors at work were too dominant, except to again leave the impression in the minds of more traders that the US Federal Reserve is edging towards a change in its tapering policy at next week’s meeting.
Meanwhile US oil and gas companies kept the number of oil rigs unchanged last week, after previously adding rigs for five consecutive weeks to their highest level since April 2020 of 569 in total and 467 looking for oil, according to the weekly report from energy services firm Baker Hughes
Comex gold fell 0.2% for the week, settling at $US1,783.90 on Friday for a solid gain of $US21.20 an ounce on the day.
Comex silver though lost 2.8% for the week to settle at $US22.45 an ounce and Comex copper dipped 0.4% over the week to end Friday at $US4.266 a pound.
Chinese trade data this week will see analysts looking at import data on oil, coal, iron ore, copper, soybeans and iron ore.
And speaking of iron ore, prices ended higher on Friday than a week earlier for a small weekly gain.
The price of 62% Fe Fines delivered to northern China finished at $US102.36, up 74 US cents on the day and $US5.69 or more than 6% for the week.