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Energy & Precious Metals - Weekly Review and Calendar Ahead

By Barani Krishnan

Investing.com - After a first-quarter blitzkrieg, oil bulls are eyeing another home-run in April, coming within cents of reaching their $65 target for U.S. crude last week before being stopped by fresh builds in U.S. rigs and inventory, as well as questions about oil demand and the economy.

West Texas Intermediateand global oil benchmark Brent rose for a sixth-straight week as Libya’s civil war put a geopolitical premium on a market already squeezed by OPEC cuts and U.S. sanctions on Venezuelan and Iranian oil. WTI is up 6% thus far for April while Brent has gained 5% after first quarter advances of about 30% for both.

Gold had a less illustrious week. The yellow metal initially soared above $1,300 on speculation that the Federal Reserve might succumb to pressure from President Donald Trump to lower interest rates. But it sunk back beneath that bullish level after minutes from Fed’s monthly meeting showed central bankers might move toward a rate hike instead if the economy picked up.

Energy Review

The week started strongly for fund managers and other speculators long on oil as the worsening military conflict in Libya returned the OPEC member to the forefront of the market’s attention after it had been obscured lately by the happenings in Iran and Venezuela.

Libya had, in fact, been on the news from the previous weekend after rebel general Khalifa Haftar, ordered his troops to march from his Benghazi domain on the east to the capital Tripoli in an attempt to unseat the U.N.-recognized administration there.

The North African country, which produces about 1.1 million barrels per day of oil, has been vulnerable since the 2011 overthrow of Muammar Gadaffi. Haftar’s forces control more than 40% of Libya’s oilfields and the key ports that export its crude.

By the time trading settled on Tuesday to await weekly supply-demand data from the U.S. Energy Information Administration, WTI had tacked on 3.5% gain for the week and hit a five-month high of $64.79.

The EIA numbers, released the following day, showed crude inventories building to an eye-watering 7 million barrels, more than three times what the market anticipated. But the EIA also reported a stunning draw of 8 million barrels in gasoline stockpiles, about four times what analysts had expected. Instead of plunging, WTI gained another 1%.

Oil bulls did have their day of reckoning on Thursday though. The Paris-based International Energy Agency, which looks after the interest of energy consumers in the West, suggested in its April report that the rise of more than $20 per barrel since January may be beyond what the economy could withstand.

Reuters also quoted an OPEC source as saying that global oil producers might decide to end their output cuts by July if the Libya, Venezuelan and Iranian supply crises wasn’t resolved by then.

The combination of these dovish messages brought crude prices down by more than 1.5% in Thursday’s settlement.

But by the next session, the market was up on Libyan tensions again as Haftar threatened to wipe out the country’s oil exports although advances by his troops had weakened in recent days.

The market also shrugged off another weekly, albeit small, rise in the U.S. oil rig count, settling the week up 1% on WTI and 2% for Brent.

Gasoline remained the star of the energy complex, up 53% on the year after adding another 2% last week. Heating oil, a proxy for diesel and other transportation fuels, gained 23% year-to-date after last week’s rise of more than 1%.

Natural gas ended the week down 0.4% at $2.65 per million British thermal units after receiving the second gas injection into storage this year. With the advent of spring, forecasts for air both cool and warm are also challenging investors in pricing the fuel.

In major energy sector news, Chevron Corp (NYSE:CVX).’s $33 billion acquisition of Anadarko Petroleum Corp (NYSE:APC)., announced Friday, will make the U.S. company the largest producer in the dusty plains of the Permian Basin by giving it control of an oil-rich area twice the size of Los Angeles.

Energy Calendar Ahead

Tuesday, April 16

American Petroleum Institute weekly report on oil stockpiles.

Wednesday, April 17

The EIA weekly report on oil stockpiles.

Thursday, April 18

EIA Weekly natural gas report

Friday, April 19

Baker Hughes weekly rig count.

Precious Metals Review

Bullion, as well as gold futures, hit $1,300 as the week began on speculation that the Federal Reserve could hit the easing button for rates to placate Trump who blames anemic U.S. growth on the central bank’s four rate hikes last year.

Spot gold, reflective of trades in bullion, was down $1.20, or 0.1%, at $1,291.52 an ounce by 1:50 PM ET (17:50 GMT).

Gold’s gains extended on Tuesday after the U.S. Commerce Department reported that orders for durable goods, which aee meant to last at least three years or more, fell 1.6% in February.

By the time New York’s precious metals markets settled on Wednesday before the Fed released its monthly meeting minutes, spot gold had gained almost 1.5% on the week and hit a near one-month high of $1,310.65.

Much of that was rolled back in the next session in a negative belated reaction to the central bank’s minutes that indicated the Fed may not be done with its tightening despite its pause now.

As the week ended, prices for bullion and gold futures diverged in a rare performance as investors tried to discern direction for the yellow metal amid conflicting data and fundamentals. Spot gold ended the week a touch lower and Comex futures marginally higher though both remained under $1,300.

Precious Metals Calendar Ahead

Monday, April 15

Chicago Fed President Evans Speaks
FOMC Member Rosengren Speaks

Tuesday, April 16

U.S. Industrial Production (YoY)
U.S. Manufacturing Production (MoM) (Mar)
U.S. NAHB Housing Market Index (Apr)

Wednesday, April 17

Euro Core CPI (YoY) (Mar)
Euro Trade Balance (Feb)
U.S. Trade Balance (Feb)
FOMC Member Bullard Speaks

Thursday, April 18

German PPI (YoY) (Mar)
German Composite PMI (Apr)
German Manufacturing PMI (Apr)
German Services PMI (Apr)
Euro Manufacturing PMI (Apr)
Euro Markit Composite PMI (Apr)
Euro Services PMI (Apr)
U.S. Core Retail Sales (MoM) (Mar)
U.S. Initial Jobless Claims
U.S. Retail Sales (MoM) (Mar)
U.S. Manufacturing PMI (Apr)

Friday, April 19

U.S. Building Permits (MoM) (Mar)
U.S. Housing Starts (Mar)

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