Commodities: Oil breaks three-week streak of gains, gold holds its ground
(ShareCast News) - Crude oil futures were in a funk again heading into the weekend, amid 'market chatter' around declining demand and concerns that Russia might yet scupper a deal by the world's largest oil producers to continue reining in their production.
In parallel, gold futures nudged higher as traders fantasised about the scope for big gains should the first round of voting in France's presidential elections, on Sunday, yield a surprise victory for either of the underdogs, far-left candidate Jean Luc Melenchon or the far-right's champion, Marine Le Pen.
Most analysts were not expecting such an outcome but many appeared to be quite cautious in their comments to clients.
Front month WTI crude oil futures were down by 2.82% to $49.28 a barrel on the ICE, adding to a near-6% slide for the week as analysts bickered about the factors behind the drop.
Meeting in Vienna, a technical committee of OPEC and non-OPEC countries concluded that a six-month extension of production cuts is necessary, two delegates with knowledge of the matter told Bloomberg.
Offsetting that report, Michael Hewson, chief market analyst at CMC Markets pointed out that "Iranian exports look set to hit a 14-month low in May which suggests that demand is also starting to slide back, which if true will mean that the current inventory overhang is likely to take longer to clear."
Perhaps, but for the moment at least Russia's energy minister was non-committal about the likelihood that his country would join in any extension - a pre-requisite for a deal.
According to some market commentary that was the trigger behind oil's swoon.
Acting as a backdrop, and ahead of the French elections on Sunday, June 2017 gold futures on COMEX were up by 0.29% at $1,287.50/oz..
"The precious metal is also not showing any signs of imminent panic among investors as the price action is the most boring. We are still sitting below the mark of 1300, but an unexpected outcome would push the price well above this mark (surpassing our initial target of 1300). This would be a start of another bull move for the metal which could bring us closer to our next target of 1380," said Naeem Aslam, chief market strategist at Think Markets.
Among soft commodities, ICE-traded July 2017 cocoa futures were extending their recent bounce from multi-year lows to $1,850 a metric tonne.
As of 1808 GMT Bloomberg's commodity index was down by 0.77% amid widespread losses in the energy complex as the US dollar spot index climbed 0.20% to 99.97.