Commodity Capsule: Crude oil fell; gold set for gain; copper extends rally

Commodity Capsule: Oil prices eased on Thursday after a larger-than-expected build in U.S. crude stockpiles stoked worries about slow demand that US interest rates could remain elevated for longer added to pressure. Brent crude futures fell to $82 a barrel. US West Texas Intermediate crude futures dropped to $78 a barrel. US crude oil stockpiles rose while gasoline and distillate inventories fell last week as refiners ran at below-seasonal lows due to planned and unplanned outages-- Energy Information Administration.

Crude inventories rose for the fifth consecutive week, increasing by 4.2 million barrels to 447.2 million barrels in the week ended February 23. Gold prices held ground on Thursday as traders awaited the Federal Reserve's preferred inflation gauge due later in the day gold futures edged towards $2,045.

The US economy grew at a solid clip in the fourth quarter amid strong consumer spending but appeared to have lost some speed early this year. New York Fed President John Williams said that even as there's still some distance to cover in achieving the US central bank's 2 per cent inflation target, the door is opening to interest rate cuts this year depending on how the data come in. Boston Fed President Susan Collins said the Fed will likely need to start cutting rates later this year. At least seven more Fed officials will speak on Thursday and Friday. Traders are betting on about 81 basis points of rate cuts for 2024, with a 63 per cent chance of the first quarter-point (25 bps) cut coming in June.

Nickel prices advanced on Thursday and were on track for the first monthly rise since July last year on worries about supply in Indonesia and Russia. Nickel on the London Metal Exchange was up 8.7 per cent every month. Nickel on the Shanghai Futures Exchange is up 7.6 per cent this month. Most of the gain came from last week's covering of bets on lower prices triggered by fear that nickel would be included in new Western sanctions against Russia. Meanwhile, delays in approving new mining quotas in Indonesia prompted smelters to slow operations and curb output.

All the other base metals on LME are set to end the month in red. Copper along with aluminium and Zinc are down 1-5 per cent so far this month. Metals were pressured by the firm dollar index and demand concerns in China, even after the week-long Lunar holiday ICE Cotton advanced to its highest level in more than a year, as it moved past 100 cents, on speculative buying and tight stocks. Cotton contract for May surged for the third straight session, settling past 101 cents per lb, the highest level since late September 2022.