Oil prices remain under pressure as OPEC’s efforts to curb supply, and rebalance the market, continue to be challenged by other sources of supply, according to the analysis team at ANZ.
“Output from Libya is rising following the deal with Wintershall that has enabled at least two fields to restart operations and sees output from Libya at four year highs. Meanwhile, US shale gas producers increased the number of rigs again last the week, the 22nd week in a row. The number of wells at the end of the May was the highest in over three years.”
“Base metals were generally higher, with solid increases across the complex. News that Chinese regulators will ease restrictions on institutions regarding investments in commodities provided a positive tone. Nickel was supported on the supply side, with 13 Indonesian smelters halting operations as prices fell below their cost of production. Aluminium gained on reports that Xinjiang, a major aluminium hub, will commence checks on smelters built after 2013. Copper inventories at Shanghai bonded warehouses fell at an accelerated pace in the first two weeks of June. Iron ore prices continue to inch higher.”
“Gold prices pared gains as markets looked toward further Fed rate hikes and, at some point, a move to tighten conditions by the ECB. Other precious metals prices were also lower overnight. Investors in exchange traded funds continue to cut positions.”
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