Commodity Capsule: Brent crude oil near 4-month high; gold fall; copper hit 3-year high

Commodity Capsule: Oil prices hover in a range near four-month highs on Friday

Gains were capped on some profit-taking and pressure from the dollar as hotter-than-expected US inflation data pushed up fears of a more hawkish Federal Reserve.

Crude prices were set to gain 4 per cent this week, its best weekly performance in five, on signs of improving US demand and tightening fuel markets.

Brent oil futures are trading close to $85 a barrel, while WTI crude futures hovers at the $80 a barrel mark.

Prices were pressured by a stronger dollar, which rose sharply on Thursday after PPI inflation data read stronger than expected for February.

The market eyes the Fed meeting next week, to see if the central bank will keep interest rates higher for longer in 2024.

White House was seen buying over 3 million barrels of oil to replenish the Strategic Petroleum Reserve.

IEA in particular hiked its demand outlook for 2024 and said that fuel supplies were likely to tighten further, as disruptions in the Middle East continued.

However, IEA warned that slowing economic growth across the globe presented a headwind to oil demand.

IEA's warning factored into concerns over higher for longer interest rates in 2024.

Shanghai copper prices hit a three-year high on Friday, while prices in London touched an 11-month peak, buoyed by a potential output cut in China.

LME advanced past $9,000 per metric ton, having hit the highest since April 2023.

LME copper is headed to 5 per cent weekly gains, its best week since January 2023.

Shanghai May copper advanced past 72,000 yuan/ton, its highest since May 2021.

Major Chinese copper smelters have reached an agreement to lower operation rates, adjust maintenance plans, and postpone new projects

China accounted for 47 per cent of the global refined copper output last year, data from the World Bureau of Metal Statistics showed.

LME Zinc and aluminum are hovering 5-7 weeks high.

Gold prices were headed on Friday for their first weekly fall in four as surprisingly hot US inflation readings suggested that the Federal Reserve could reduce the number of rate cuts this year and may push the first cut beyond June.

US gold futures were steady at $2,170 on track to post a weekly fall of more than 0.7 per cent, its first since mid-February.

US producer prices increased more than expected in February, which could fan fears that inflation is picking up again.

Higher inflation adds pressure on the US Fed to keep interest rates elevated.

Traders have pared back the chances of a rate cut at the US Fed's June meeting to 61 per cent, from about 75 per cent last Friday.

The dollar index rose 0.7 per cent this week so far, on pace for its largest weekly gain since mid-January.

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