Oil prices surged more than 3% at the end of the week as the US and Iran extended nuclear negotiations, raising uncertainty among traders.
Gold and silver prices also rose on Friday as safe-haven demand dominated the precious metals market. Gold was set for a seventh consecutive monthly gain in February.
Meanwhile, copper prices were nearly 4% higher than the previous week’s close.
Experts believe that further price increases would not be justified if the current supply situation were taken into consideration.
Oil surges on US-Iran conflict
Following the extension of nuclear talks between the United States and Iran, oil prices increased by approximately 3% on Friday, with traders closely watching for any possible supply disruptions.
The West Texas Intermediate crude last traded at $67.61 per barrel, up 3.7%, while Brent was 3.5% higher at $73.35 a barrel.
Brent and WTI benchmarks are currently trading at their highest levels since July and August, respectively, and are set to record weekly gains of 1.6% and 1.7%.
Indirect talks between the United States and Iran took place in Geneva on Thursday, following an order by US President Donald Trump for a military buildup in the region.
Initially, oil prices rose by over a dollar a barrel, spurred by media reports suggesting the discussions had stalled due to the US demanding that Iran halt all uranium enrichment.
However, the price gains were later reversed after the Omani mediator indicated that both sides had achieved progress in the negotiations.
Meanwhile, eight OPEC+ nations are set to determine this weekend whether to adjust their voluntary oil production limits for April.
Reports suggest OPEC+ may look at a potential increase of 137,000 barrels per day to the production quotas.
This adjustment is primarily driven by a less saturated oil market than initially forecast for the beginning of the year.
A key factor is that a significant portion of the expected oversupply is challenging to sell due to sanctions and is currently being held in storage on oil tankers at sea.
Supply disruptions have also occurred, such as the recent event in Kazakhstan.
The US-Iran conflict further complicates the OPEC+ decision, making it difficult to currently forecast the likelihood and potential severity of future supply disruptions.
“The continuing risk of a US military strike is therefore likely to remain the dominant issue on the oil market, which suggests that oil prices will remain well supported,” Carsten Fritsch, commodity analyst at Commerzbank AG, said.
Gold headed for monthly gain
Gold’s price has recently stabilised, hovering around $5,200 per ounce.
The market has seen a notable reduction in the significant price volatility experienced previously.
On Friday, gold prices rose by nearly 1% to trade near $5,240 per ounce.
Geopolitical tensions, specifically the US-Iran conflict and the war in Ukraine, are providing support for gold prices.
Furthermore, while the most significant tariff disruption has been averted so far, the recent US Supreme Court ruling on tariff policy has introduced fresh uncertainty to the market.
A temporary 10% global import tariff was implemented by the US on Tuesday.
However, US Trade Representative Jamieson Greer stated that this rate would be increased to 15% for certain nations.
In other news, concerning economic data, the number of Americans submitting new claims for jobless benefits rose marginally last week, although the unemployment rate held steady throughout February.
Meanwhile, inflows into gold ETFs, which have reached 22 tons this week according to Bloomberg data, demonstrate gold’s ongoing appeal as a safe-haven asset.
While the price of gold has stabilised, volatility remains high for other precious metals.
Silver prices bounced back above $92 per ounce on Friday, following Thursday’s dip to nearly $85 an ounce.
“The question now is whether silver can bust above an area of resistance just below $90 and then hold above here on any subsequent pullback,” said David Morrison, senior market analyst at Trade Nation.
“That would be a bullish development, although it is far from clear if silver could then go on to make significant gains from there.”
Copper rises
Copper prices have climbed to $13,500 per ton, marking an increase of about 4% since the close of last week.
However, current supply conditions do not warrant further significant price hikes, Thu Lan Nguyen, head of FX and commodity research at Commerzbank, said in a report.
The copper market experienced a significant easing in its supply situation, contrary to earlier concerns that had pushed prices higher over the last year.
Data from the International Copper Study Group indicates an oversupply of nearly 400,000 tons occurred last year.
The market has yet to show signs of a supply shortage, despite the previous year’s supply surplus standing at 70,000 tons.
After seasonal adjustment, the surplus ballooned to 154,000 tons in December, contrasting sharply with the nearly balanced market observed in the autumn.
This is also consistent with the development of inventories. These have been rising significantly on the LME since mid-January.
“The build-up of inventories has been even stronger in Asia recently,” Nguyen noted.
This is, however, likely a result of the Chinese New Year celebrations held last week.
“How quickly stocks there fall again is likely to depend on how quickly demand picks up again after the holidays,” Nguyen added.
The three-month copper contract on the London Metal Exchange was at $13,438 per ton, up 1%.
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