WTI Dips $2.0 But Set to End Week Higher; Gold Recovers to $1,800 Level

Key Points

• WTI dipped over $2.0 on Friday, but remains on course to gain over $3.0 this week after recovering above $90.
• Copper prices also dipped on Friday and are also on course for solid weekly gains.
• Gold recovered back to the $1,800 level.

WTI Dips, But Set to End Week in the Green

Front-month futures contracts of the US benchmark for sweet light crude oil, West Texas Intermediary or WTI, fell a little over $2.0 on Friday to just under the $92 per barrel mark. Traders were monitoring updates relating to a damaged oil pipeline that had disrupted production at seven offshore oil rigs in the US Gulf of Mexico.

As much as 410,000 barrels per day of supply was reported to have been taken offline on Thursday, but reports on Friday said the pipeline is expected to be fixed by the end of the day on Friday, allowing for a return of normal operations. Despite Friday’s downside, WTI looks set to end the week over $3.0 in the green, though technicians still say it is in a downtrend that may take prices as low as the mid-$80s per barrel.

Oil traders have had to balance confusing signals this week on the outlook for oil demand. For example, this week’s US oil inventory report was an odd one, showing a massive, unexpected rise in headline stocks (bearish), but a large drop in gasoline stocks (bullish). Meanwhile, in its latest monthly report, International Energy Agency raised its 2022 oil demand growth forecast this week, citing increased demand for oil amid “switching” from gas, as prices surge. Meanwhile, in its monthly report also released this week, OPEC lowered its 2022 demand growth forecast.

Copper Prices Dip, But Still on Course for Solid Weekly Gains

Copper prices dipped on Friday as a rebound in the US dollar made the USD-denominated red metal more expensive for international buyers. Copper was last down about 0.4% and back below $3.70. Data out of China on Friday showed that loan growth in the country in July was significantly lower than expected, which also weighed on sentiment in the industrial metals market somewhat. China is far and away the world’s largest consumer of copper.

But copper prices remain on course to have risen more than 3.5% this week, taking their gains since their mid-July lows under $3.15 to nearly 18%. While the economic data coming out of China as of late is patchy at best, authorities have been taking steps to stimulate the economy, boosting industrial metal market sentiment. Focus has also been on an increasingly tight copper market, with major producers having revised lower their output forecasts in recent weeks and stockpiles in major Chinese/London warehouses under pressures.

Elsewhere, gold prices rebounded back to the $1,800 per troy ounce mark on Friday, despite the stronger US dollar. The precious metal thus looks set to end the week about about 1.4% higher, with downside US inflation surprises over the past few days reducing fears about the Fed needing to get overly aggressive with rate hikes in the coming quarters, which would likely be a negative for the precious metal.