Crude Oil, Gold Finish Year with Stellar Performances

While cryptocurrencies like Bitcoin have been stealing the headlines lately and with U.S. equity markets hovering near record highs, commodities roared back in December led by solid performances in December by crude oil and gold.

In December, crude oil prices surged to their highest levels since mid-2015 with U.S. oil prices rising above $60 a barrel on the final trading day of the year. Since the start of the year, international-benchmark Brent crude oil is up 14% and U.S. West Texas Intermediate crude oil is up 12%. Gold turned in its best performance since August and finished the year with its biggest annual rise since 2010.

Crude Oil

It was a quiet day in the energy markets on Friday as buyers drove futures prices higher on low volume with no notable sellers in sight. Buyers had momentum all week, driven higher on the first day of trading for the week on the news of a pipeline explosion in Libya. This news came on top of a pipeline shutdown in the North Sea that has been supportive for the markets, especially Brent crude oil, for a little more than two weeks. Additionally, prices have also been supported by strong demand from China, consecutive drawdowns in U.S. supply and the OPEC-led plan to cut output, trim the global supply and stabilize prices.

February West Texas Intermediate crude oil settled at $60.42, up $0.58 or +0.97%. March Brent Crude oil finished the week at $66.87, up $0.71 or +1.07%.

Earlier in the week, WTI prices were driven higher by data from the U.S. Energy Information Administration, which showed a modest drop last week in domestic oil production to 9.75 million barrels per day (bpd) from 9.79 million bpd the previous week.

WTI prices were further supported by a drop in U.S. commercial crude storage levels, which dropped by 4.6 million barrels in the week-ending December 22 to 431.9 million barrels, according to the EIA.

In other news, unleaded gasoline rebounded on Friday after two days of consolidation to close higher on Friday. February Unleaded Gasoline settled at $1.7958, up 0.0012 or 0.07%.

This week’s EIA report showed total gasoline inventories increased by 600,000 barrels last week and moved above the upper limit of the five-year average range. The government report went on to say that U.S. refineries produced about 10.2 million barrels of gasoline a day the week-ending December 22, up by about 100,000 barrels a day compared to the prior week. Additionally, total motor gasoline supplied, the EIA’s proxy for demand, averaged over 9.2 million barrels a day for the past four weeks, up about 2% compared with the same period a year ago.

Gold

Gold futures hit their highest level since October 16 on Friday, driven higher by a huge break in the U.S. Dollar against a basket of currencies, political tensions and concerns over the impact of Fed interest rate hikes and U.S. tax reform on U.S. economic growth.

February Comex Gold futures settled at $1309.30, up $12.10 or +0.93%.

In other metals news, palladium futures rose to their highest level in nearly 17 years last week, climbing more than 55 percent in 2017 on growing concerns over supply. March Palladium settled at $1061.00, down $2.45 or -0.23%.