Brent crude is at $116.35 a barrel, heading for its biggest quarterly gain in almost 2 years, as Middle East supply worries lead concerns
Traders, analysts and investors see a new floor for prices around $100 a barrel, supported by supply risks and expanding economies after the most turbulent and volatile quarter for the oil market since the end of 2008.
In Syria, where more than 60 people have already been killed in protests, President Bashar al-Assad defied calls to lift a decades-old emergency law as hundreds chanting "freedom" marched in the port city of Latakia on Wednesday.
"Friday prayers may be a key issue supporting the market now, and some of the focus is starting to shift back to Japan and the cost of rebuilding the country," said Thorbjoern Bak Jensen, an analyst at Global Risk Management.
Japan's oil product sales rose 0.8 percent in February from a year earlier as improvement in the economy helped boost gasoline demand for a fourth straight month, although the outlook for consumption in the aftermath of the earthquake remained uncertain.
Lost nuclear power and reconstruction efforts could boost Japanese demand for oil to generate electricity.
The International Energy Agency has said an additional 200,000 barrels per day will be needed to fill in after Japan's nuclear disaster.
But traders say the impact on world supply could be higher.
"The nuclear issue in Japan could have quite significant consequences. A lot of countries are now debating nuclear and new building is on hold," a gasoil trader said.
WAR IN LIBYA
The prospect of a protracted civil war in Libya remained as forces loyal to Libyan leader Muammar Gaddafi regained key oil ports at Ras Lanuf and Brega in a counter-attack on Wednesday, highlighting the vulnerability of rebel forces in the absence of Western air strikes.
Gaddafi's regime took a hit after the country's foreign minister defected in protest against attacks on civilians and flew to Britain.
U.S. President Barack Obama has signed a secret order authorizing covert U.S. government support for rebel forces seeking to oust Gaddafi, government officials told Reuters on Wednesday.
The United States is part of a coalition, with NATO members and some Arab states, which is conducting air strikes on Libyan government forces under a U.N. mandate aimed at protecting civilians opposing Gaddafi.
Libyan oil shipments remain at a standstill, with no one attempting to hire tankers due to violence and the impact of sanctions, shipping sources said on Wednesday.
GLOBAL RECOVERY
U.S. private employers added more than 200,000 jobs in March, a report showed on Wednesday, ahead of government data on March non-farm payrolls due on Friday.
Weekly U.S. initial jobless claims due at 1230 GMT for the week ending March 26 are likely to drop to their lowest in four weeks and the second lowest since July 2008, according to IFR Markets, a Thomson Reuters news and market analysis service.
"The second quarter is a good period, and oil demand should be increasing," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments, adding that he expected U.S. crude to end the year close to $120.
"The world economy should be quite positive, especially after mid-May, and the downside for crude should be quite limited because of the geopolitical risk of disruption to supply in the Middle East and North Africa."
Gold recovers as dollar slips, Mideast simmers
Gold rose in Europe on Thursday, rebounding after the previous session's late price retreat, as dollar weakness, concern over Euro-zone sovereign debt and unrest across the Middle East region supported buying.
The metal is on track for a tenth consecutive quarter of gains, also supported by low interest rates and high liquidity in the wake of a raft of quantitative easing programmes.
But its quarterly rise is set to be its smallest since the third quarter of 2008, before the financial crisis took hold, as investors fret over the prospect of monetary tightening in the United States and the euro zone.
Spot gold was bid at $1,428.90 an ounce at 0914 GMT (5:14 a.m. ET), against $1,423.38 late in New York on Wednesday. U.S. gold futures for April delivery rose $5.20 to $1,429.00.
"Until we see a substantial decrease in liquidity or a rise in real interest rates, you would look for an upward trend, and all these other factors like the euro zone debt and Middle East, North Africa issues are also a short-term support," said Standard Bank analyst Walter de Wet.
But he said while the bank still expects to see gold prices above $1,500 an ounce, this is unlikely to happen before the third quarter.
"We're unlikely to see massive new inflows into gold at the moment because people are uncertain about what the Fed's going to do," he said. "We are pretty certain they are not going to change interest rates for the next three quarters at least, but they may start reducing the balance sheet."
Investors are awaiting a report on U.S. non-farm payrolls for March due Friday, considered a key indicator of the health of the U.S. economy. Forecasts suggest the economy recorded a second month of solid job growth this month.
Signs the U.S. jobs market is recovering could support calls from some Fed officials to wind up the central bank's monetary easing programme earlier than expected.
"The gold market is caught on one hand between geopolitical risks and inflation-hedge and sovereign risk buying, and on the other hand by growing expectations that QE2 will wind down and monetary policy will be tightened," said HSBC in a note.
DOLLAR SLIPS
The dollar fell 0.4 percent against a basket of major currencies on Thursday. A weaker dollar makes assets priced in the U.S. currency cheaper for other currency holders.
The euro was up 0.4 percent on anticipation of a rate hike from the European Central Bank next month, but rating agency Moody's warned further sovereign ratings downgrades for euro zone countries cannot be ruled out.
Concerns over euro zone sovereign debt were a major factor fuelling a 30 percent rise in gold prices last year.
Oil prices also climbed, with Brent crude futures heading for their biggest quarterly gain in almost two years as violence swept across the Middle East and North Africa.
- On the supply side of the market, China's leading mined gold producer, Zijin Mining, said it expects gold prices to rise above $1,500 an ounce by year end, and said it plans to produce 62.57 tonnes of gold this year.
Among other precious metals, silver was bid at $37.76 an ounce against $37.44.
Silver is on track to rise 22 percent this quarter, benefiting from gains in gold and expectations that industrial demand for the metal will improve.
The gold: silver ratio dropped to its lowest since 1983 on Thursday at 37.8 as silver outperformed gold.
Platinum was at $1,772.99 an ounce against $1,765.85, while palladium was at $760.72 against $751.78.
Global stocks set for 3rd quarterly gain
World stocks climbed to a new three-week high on Thursday and the euro inched higher ahead of the publication of Irish bank stress tests aimed at capping one of the major risks in Europe's debt crisis.
Stocks have now recovered all of the losses from a sharp sell-off after disaster struck Japan earlier this month and are heading for their third quarterly gain in a row thanks largely to improving U.S. growth.
The yen fell to a fresh 10-month low versus the euro and touched a three-week trough against the dollar as expectations grew that Japan would lag the Euro zone and U.S. central banks in raising interest rates. So far this year, the euro has risen nearly 8 percent against the yen.
"Rate differentials are playing a big role, especially as there is no probability for the BOJ to become more hawkish, even in the medium to long-term." said Manuel Oliveri, currency strategist at UBS in Zurich.
"There is scope for rate expectations to stay supported in the euro zone. German demand and the service sector is strong so price rises are likely to become domestically driven, not just commodity driven."
Europe's FTSEurofirst 300 share index was flat, while Irish shares rose 0.8 percent and yields on Ireland's 10-year government bond were steady at 10.18 percent.
The Irish Independent said Dublin's stress tests would show an additional 20-25 billion euro hole in its banks capital -- broadly in line with expectations -- and will be followed by a radical restructuring of the sector.
The euro was up 0.3 percent at 117.41 yen and the dollar was down 0.1 percent at 82.80 yen after reaching 83.21 yen earlier.
OIL TENSIONS
Brent crude rose toward $116 a barrel and set to become the best performing major asset in the first quarter of 2011 as political unrest in the oil-rich Middle East and North Africa ignited supply concerns.
Higher oil prices, seen as a tax on global growth, have not yet knocked world equities off their stride. Global equities measured by MSCI All-Country World Index advanced 0.3 percent, on track for a 4.2 percent gain for January-March -- the third straight quarterly rise.
MSCI emerging markets index rose for the third day, up 0.7 percent and were on track to gain 1.3 percent for the first quarter, recovering losses from earlier this year when investors shifted their money to developed market equities on concerns over inflation in developing countries.
However, emerging market shares still under-performed developed market equities, whose strong performance was mainly driven by gains in U.S. stocks. The Dow Jones industrial average is up 6.7 percent this quarter.
"While we remain comfortable with being overweight financials, we see less need in making such hard distinctions now given the improving background in China and the reduced scope for economic surprise in the U.S. in the short term," Deutsche Bank said in a note.
"Increasingly we find ourselves looking for opportunities across the cyclical stocks as whole, both global and domestic."
JAPAN AVERSION
Japan's Nikkei average added 0.5 percent, with fund managers shifting into construction stocks and smelters while moving away from domestic-demand shares on expectations for a hike in demand as Tokyo said it may spend $120 billion on reconstruction.
Japanese fund managers cut their global stock weighting to a 12-year low in March, while raising their bond weighting to an all-time high as they reduced risk positions after the earthquake, a Reuters survey showed.
Brent crude rose 0.6 percent toward $116 a barrel, on track for a 22.3-percent gain for January-March -- the biggest quarterly rise in almost two years. The global economic recovery also underpinned prices.
However, copper was down 1.7 this quarter.
Yields on benchmark 10-year U.S. Treasuries eased 1 basis point to 3.4331 percent. They are still up about 14 basis points from the beginning of the year though off a nine-month high of 3.7698 percent.
Oil prices soar
Brent crude is at $116.35 a barrel, heading for its biggest quarterly gain in almost 2 years, as Middle East supply worries lead concerns
Traders, analysts and investors see a new floor for prices around $100 a barrel, supported by supply risks and expanding economies after the most turbulent and volatile quarter for the oil market since the end of 2008.
In Syria, where more than 60 people have already been killed in protests, President Bashar al-Assad defied calls to lift a decades-old emergency law as hundreds chanting "freedom" marched in the port city of Latakia on Wednesday.
"Friday prayers may be a key issue supporting the market now, and some of the focus is starting to shift back to Japan and the cost of rebuilding the country," said Thorbjoern Bak Jensen, an analyst at Global Risk Management.
Japan's oil product sales rose 0.8 percent in February from a year earlier as improvement in the economy helped boost gasoline demand for a fourth straight month, although the outlook for consumption in the aftermath of the earthquake remained uncertain.
Lost nuclear power and reconstruction efforts could boost Japanese demand for oil to generate electricity.
The International Energy Agency has said an additional 200,000 barrels per day will be needed to fill in after Japan's nuclear disaster.
But traders say the impact on world supply could be higher.
"The nuclear issue in Japan could have quite significant consequences. A lot of countries are now debating nuclear and new building is on hold," a gasoil trader said.
WAR IN LIBYA
The prospect of a protracted civil war in Libya remained as forces loyal to Libyan leader Muammar Gaddafi regained key oil ports at Ras Lanuf and Brega in a counter-attack on Wednesday, highlighting the vulnerability of rebel forces in the absence of Western air strikes.
Gaddafi's regime took a hit after the country's foreign minister defected in protest against attacks on civilians and flew to Britain.
U.S. President Barack Obama has signed a secret order authorizing covert U.S. government support for rebel forces seeking to oust Gaddafi, government officials told Reuters on Wednesday.
The United States is part of a coalition, with NATO members and some Arab states, which is conducting air strikes on Libyan government forces under a U.N. mandate aimed at protecting civilians opposing Gaddafi.
Libyan oil shipments remain at a standstill, with no one attempting to hire tankers due to violence and the impact of sanctions, shipping sources said on Wednesday.
GLOBAL RECOVERY
U.S. private employers added more than 200,000 jobs in March, a report showed on Wednesday, ahead of government data on March non-farm payrolls due on Friday.
Weekly U.S. initial jobless claims due at 1230 GMT for the week ending March 26 are likely to drop to their lowest in four weeks and the second lowest since July 2008, according to IFR Markets, a Thomson Reuters news and market analysis service.
"The second quarter is a good period, and oil demand should be increasing," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments, adding that he expected U.S. crude to end the year close to $120.
"The world economy should be quite positive, especially after mid-May, and the downside for crude should be quite limited because of the geopolitical risk of disruption to supply in the Middle East and North Africa."
Gold recovers as dollar slips, Mideast simmers
Gold rose in Europe on Thursday, rebounding after the previous session's late price retreat, as dollar weakness, concern over Euro-zone sovereign debt and unrest across the Middle East region supported buying.
The metal is on track for a tenth consecutive quarter of gains, also supported by low interest rates and high liquidity in the wake of a raft of quantitative easing programmes.
But its quarterly rise is set to be its smallest since the third quarter of 2008, before the financial crisis took hold, as investors fret over the prospect of monetary tightening in the United States and the euro zone.
Spot gold was bid at $1,428.90 an ounce at 0914 GMT (5:14 a.m. ET), against $1,423.38 late in New York on Wednesday. U.S. gold futures for April delivery rose $5.20 to $1,429.00.
"Until we see a substantial decrease in liquidity or a rise in real interest rates, you would look for an upward trend, and all these other factors like the euro zone debt and Middle East, North Africa issues are also a short-term support," said Standard Bank analyst Walter de Wet.
But he said while the bank still expects to see gold prices above $1,500 an ounce, this is unlikely to happen before the third quarter.
"We're unlikely to see massive new inflows into gold at the moment because people are uncertain about what the Fed's going to do," he said. "We are pretty certain they are not going to change interest rates for the next three quarters at least, but they may start reducing the balance sheet."
Investors are awaiting a report on U.S. non-farm payrolls for March due Friday, considered a key indicator of the health of the U.S. economy. Forecasts suggest the economy recorded a second month of solid job growth this month.
Signs the U.S. jobs market is recovering could support calls from some Fed officials to wind up the central bank's monetary easing programme earlier than expected.
"The gold market is caught on one hand between geopolitical risks and inflation-hedge and sovereign risk buying, and on the other hand by growing expectations that QE2 will wind down and monetary policy will be tightened," said HSBC in a note.
DOLLAR SLIPS
The dollar fell 0.4 percent against a basket of major currencies on Thursday. A weaker dollar makes assets priced in the U.S. currency cheaper for other currency holders.
The euro was up 0.4 percent on anticipation of a rate hike from the European Central Bank next month, but rating agency Moody's warned further sovereign ratings downgrades for euro zone countries cannot be ruled out.
Concerns over euro zone sovereign debt were a major factor fuelling a 30 percent rise in gold prices last year.
Oil prices also climbed, with Brent crude futures heading for their biggest quarterly gain in almost two years as violence swept across the Middle East and North Africa.
Among other precious metals, silver was bid at $37.76 an ounce against $37.44.
Silver is on track to rise 22 percent this quarter, benefiting from gains in gold and expectations that industrial demand for the metal will improve.
The gold: silver ratio dropped to its lowest since 1983 on Thursday at 37.8 as silver outperformed gold.
Platinum was at $1,772.99 an ounce against $1,765.85, while palladium was at $760.72 against $751.78.
Global stocks set for 3rd quarterly gain
World stocks climbed to a new three-week high on Thursday and the euro inched higher ahead of the publication of Irish bank stress tests aimed at capping one of the major risks in Europe's debt crisis.
Stocks have now recovered all of the losses from a sharp sell-off after disaster struck Japan earlier this month and are heading for their third quarterly gain in a row thanks largely to improving U.S. growth.
The yen fell to a fresh 10-month low versus the euro and touched a three-week trough against the dollar as expectations grew that Japan would lag the Euro zone and U.S. central banks in raising interest rates. So far this year, the euro has risen nearly 8 percent against the yen.
"Rate differentials are playing a big role, especially as there is no probability for the BOJ to become more hawkish, even in the medium to long-term." said Manuel Oliveri, currency strategist at UBS in Zurich.
"There is scope for rate expectations to stay supported in the euro zone. German demand and the service sector is strong so price rises are likely to become domestically driven, not just commodity driven."
Europe's FTSEurofirst 300 share index was flat, while Irish shares rose 0.8 percent and yields on Ireland's 10-year government bond were steady at 10.18 percent.
The Irish Independent said Dublin's stress tests would show an additional 20-25 billion euro hole in its banks capital -- broadly in line with expectations -- and will be followed by a radical restructuring of the sector.
The euro was up 0.3 percent at 117.41 yen and the dollar was down 0.1 percent at 82.80 yen after reaching 83.21 yen earlier.
OIL TENSIONS
Brent crude rose toward $116 a barrel and set to become the best performing major asset in the first quarter of 2011 as political unrest in the oil-rich Middle East and North Africa ignited supply concerns.
Higher oil prices, seen as a tax on global growth, have not yet knocked world equities off their stride. Global equities measured by MSCI All-Country World Index advanced 0.3 percent, on track for a 4.2 percent gain for January-March -- the third straight quarterly rise.
MSCI emerging markets index rose for the third day, up 0.7 percent and were on track to gain 1.3 percent for the first quarter, recovering losses from earlier this year when investors shifted their money to developed market equities on concerns over inflation in developing countries.
However, emerging market shares still under-performed developed market equities, whose strong performance was mainly driven by gains in U.S. stocks. The Dow Jones industrial average is up 6.7 percent this quarter.
"While we remain comfortable with being overweight financials, we see less need in making such hard distinctions now given the improving background in China and the reduced scope for economic surprise in the U.S. in the short term," Deutsche Bank said in a note.
"Increasingly we find ourselves looking for opportunities across the cyclical stocks as whole, both global and domestic."
JAPAN AVERSION
Japan's Nikkei average added 0.5 percent, with fund managers shifting into construction stocks and smelters while moving away from domestic-demand shares on expectations for a hike in demand as Tokyo said it may spend $120 billion on reconstruction.
Japanese fund managers cut their global stock weighting to a 12-year low in March, while raising their bond weighting to an all-time high as they reduced risk positions after the earthquake, a Reuters survey showed.
Brent crude rose 0.6 percent toward $116 a barrel, on track for a 22.3-percent gain for January-March -- the biggest quarterly rise in almost two years. The global economic recovery also underpinned prices.
However, copper was down 1.7 this quarter.
Yields on benchmark 10-year U.S. Treasuries eased 1 basis point to 3.4331 percent. They are still up about 14 basis points from the beginning of the year though off a nine-month high of 3.7698 percent.
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