Commodity Capsule: Brent crude oil falls; gold range bound; Zinc price at 3-week low

Commodity Capsule: Oil prices fell on Wednesday after industry data showed an outsized build in US inventories.

Pressure from the resilient dollar, ahead of cues on US inflation and interest rates, were additional headwinds to crude prices.

Brent oil futures in June fell under $85 a barrel, and WTI crude futures fell below $81 a barrel.

Outsized moves in oil came amid lower trading volumes before the Good Friday holiday.

Data from the American Petroleum Institute showed that US crude inventories saw a build of 9.3 million barrels last week, compared to a drop of 1.5 million barrels in the prior week.

Strength in the dollar, which hovered past the 104 mark near one-month highs, weighed on oil prices.

Zinc prices slid on Wednesday to hit their lowest in three weeks, amid firm dollar and weakening demand from the steel sector.

Zinc on LME eased to $2,430/metric ton, the weakest since March 4.

Shanghai May zinc contract dipped to 20,700 yuan/ton, hovering lowest since March 6.

Zinc inventories in LME and SHFE warehouses have been rising, pushing the discount of LME cash zinc contract to a three-month contract to $50.83/ton on Tuesday, the biggest since November 1991.

In China, a lack of sufficient capital has slowed the construction of infrastructure and property projects in the first quarter of 2024, weakening demand for zinc.

Gold prices were largely range-bound on Wednesday, supported by lower US Treasury yields, as investors stayed on the sidelines awaiting more cues on Federal Reserve policy.

US gold futures edged below $2,180 per ounce.

US bond yields retreated slightly on Tuesday after strong demand at an auction of $67 billion in five-year notes.

Investors look forward to US core personal consumption expenditure price index data due on Friday to gauge when the Fed may begin cutting interest rates.

Data on Tuesday showed orders for long-lasting US manufactured goods increased more than expected in February, while business spending on equipment showed tentative signs of recovery.

Gold prices hit a record high last week after Fed policymakers indicated they still expect to reduce interest by 0.75 per cent by 2024 end despite recent high inflation readings.

Traders are pricing in a 72 per cent probability that Fed will begin cutting rates in June.

China's net gold imports via Hong Kong slumped about 48 per cent in February to the lowest level since November.

US natural gas futures fell for the sixth consecutive trading session to near four year low on Wednesday.

Forecasts for milder weather and less heating demand over the next two weeks than previously expected and ample amounts of gas in storage.

The expiration of the April futures contract and low amounts of gas flowing to liquefied natural gas export plants due to work at Freeport LNG's export plant in Texas weighed on prices.

Gas futures for May delivery on the New York Mercantile Exchange fell to $1.77/million British thermal units, their lowest close since July 2020.

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