The rebound in commodity prices seen from mid-February is running out of steam, even though the weakening US dollar should be providing new fuel.
The US dollar is down more than 4% against a basket of major trading partner currencies and looking to go lower, while the euro and the yen have risen sharply.
Iron ore prices are down more than 16% from their peak, gold prices have been basically flat for the past month, oil prices slumped sharply on Friday and copper prices continue to lose ground.
The Bloomberg Commodity Index has lost 4.1% since its most recent high on March 17 – before that it rose more than 6.2% from the start of the month to March 17.
Copper started March at just over $US2.18 a pound, peaked at $US2.21 a pound around March 17 and 21, and has now fallen 5.6% to $US2.16 a pound in the past 9 trading days.
US oil futures peaked at $US39.79 a barrel on March 24, the highest since last July. They have fallen $US3 a barrel, or nearly 10% since then, with much of that happening on Friday with a near 7% slide last week in New York.
That was after a senior Saudi leader cast doubt on whether the major crude producer would participate in any plan to stabilise global output. Stronger economic data for China, much of Europe and especially the US (the March jobs report in particular) should have helped prices move higher on Friday, as should another big fall in the number of rigs drilling for oil and gas in the US.
But these factors failed to provide much support for prices and West Texas Intermediate crude futures for May delivery settled at $36.79 a barrel, down $US1.55 or 4%.
That left West Texas crude futures down 6.8% for the week.
In London, June Brent crude fell $US1.66, or 4.1%, to $US38.67 a barrel for a loss of nearly 6% for the week.
The news from Saudi shook the comfortable assumption that the Saudis are interested in an output freeze. In fact conditions for Saudi support have emerged from the comments of the senior Saudi leader, Mohammad bin Salman, the deputy crown prince of Saudi Arabia, in an interview with Bloomberg on Friday.
He said Saudi Arabia will agree to freeze production only if Iran and other major producers agree to do the same.
The news sent oil prices sharply lower because Iran has repeatedly made clear it will continue to raise output until exports reach pre-sanction levels.
Early last week the Saudis had appeared to soften their tone on a possible producer agreement at a summit in Qatar on April 17 to cap output without Iran.
That no longer seems to be the case, as the Saudi Crown Prince is a powerful figure in the evolving power structure in thew country.
The latest oil rig use report from Baker Hughes showed that the number of active oil drilling rigs in the US last week fell by 10 to 362. That was the second weekly fall in a row. The total US rig count fell 14 to 450, which marked another record low.
The weakish US dollar didn’t help gold or copper on Friday (nor silver). Comex gold in New York lost 1% or $US12.10 to end the week around $US1,223 an ounce – based on the front month contracts the price is up a touch – around 0.2%.
The solid economic data for the US saw some traders raise their bets on two Fed interest rises this eyar, despite last week’s cautionary statements from chair, Janet Yellen, that the central bank will proceed slowly with increases this year.
Comex May silver also sank after the jobs report on Friday night, our time, losing 41.8 cents, or 2.7%, to end at $US15.046 an ounce, 1% lower over the week after a 12% gain in the March quarter.
And Comex May copper ended at $US2.163 a pound down 2 cents, or 0.9%, for a weekly loss of 3%.
Iron ore ended March on Thursday 8.3% higher at $US53.75 a tonne to cap its biggest quarterly rise since December 2012, according to Metal Bulletin. It dipped again on Friday.
