GOLD & COMMODITIES

The U.S. oil is industry getting closer to a reckoning, but it is still pumping record amounts of oil and sending it to world markets.

MOSCOW/DUBAI/LONDON (Reuters) – Oil producers need to resume cooperation in an effort to stabilize the global market, Russian and OPEC officials said, as the industry reels from a demand and price collapse caused by the coronavirus pandemic and an emerging price war. A three-year supply pact between the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, fell apart this month, prompting OPEC to remove limits on its output. One of the reasons for the breakdown of the deal between OPEC and other producers, a group known as OPEC+, was Russia’s reluctance to support bigger curbs to output.

(Bloomberg) — Oil deepened losses as a U.S. government plan to buy oil for its emergency reserve fell through, adding to worries over demand destruction due to the coronavirus and a looming global supply glut.Futures in New York fell as much as 5.2% after the planned U.S. purchases were rescinded amid uncertainty over funding from Congress. The reversal comes as investors grapple with weakness across physical crude markets. There’s also growing worry of crippled demand from the pandemic with Goldman Sachs Group Inc. warning consumption would decline by almost 19 million barrels a day next month.Market gauges were already signaling weakness, with key swaps in the North Sea plummeting, and U.S. traders and consultant IHS Markit raising alarm about storage space running out.Falling crude prices were undeterred by the U.S. Senate approving a $2 trillion stimulus plan after days of intense negotiations. The House is under pressure to pass the bill quickly and send it to President Donald Trump for his signature as signs of weakness in the economy mount with American jobless claims surging to a record 3.28 million last week.The White House is urging Saudi Arabia to dial back its plan to flood the crude market. Still, any agreement to curtail supply among producers will be too little and too late in the face of an unprecedented shock for the world’s oil refining system, Goldman said.Refineries in India — the world’s third-largest crude importer — are preparing to slash processing rates by as much as half, according to estimates from one of the country’s biggest Middle Eastern suppliers.“We expect crude demand to now start declining, following products demand on its downwards path, and this is what will fundamentally drive prices lower,” said Per Magnus Nysveen, head of analysis at Rystad Energy AS.Some producers are already showing the signs of strain though. Brazil’s Petrobras said it will cut production by 100,000 barrels a day through the end of March as a result of falling demand. A handful of operators in Canada have already succumbed to the lower price environment and reduced output.The glut extends far beyond the U.S. The Brent Dated-to-frontline swap, which helps traders to cover the gap between the futures and physical market in the North Sea was at the weakest level in at least a decade on Thursday. Similarly, Russian Urals crude traded at a nine-year low, and the country plans to boost its eastern exports to a record in May.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

After trading in the low $50s for most of February, oil’s per barrel price plunged to $27 and change at one point this week, the lowest level since early 2016.

The news is a sudden U-turn from previous attempts to support the oil market as the new coronavirus hammers global demand.

Oil futures turn lower Thursday as traders await Russia’s decision on whether to back a plan that would see OPEC and its allies cut output by 1.5 million barrels a day in response to the coronavirus.

(Bloomberg) — Gold is heading for the biggest weekly gain since 2016, burnishing its credentials as an effective haven, as fearful investors struggle to assess the impact of the expanding global health crisis.Bullion’s up 5.3% since Monday, near seven-year highs, amid a rush away from risk. An epic collapse in bond yields is spurring gains, with concerns rising over the scale of the coronavirus outbreak and effectiveness of policy.The precious metal is one of the standout winners from the outbreak, with Goldman Sachs Group Inc. saying the commodity “has immunity to the virus.” Separately, money manager Jeffrey Gundlach told CNBC that gold is the best thing to own now and is headed to new highs. Bullion’s jump has come as equities sank and the Federal Reserve enacted an emergency rate cut.“The risk-off tone in markets played into the hands of gold,” Australia & New Zealand Banking Group Ltd. said in a note. Investor appetite was “supported by sharp falls in equity markets,” it said.Gold was steady at $1,670.25 an ounce at 11:15 a.m. in Shanghai after rallying as much as 2.3% on Thursday. A break above $1,689.31 — the intraday peak set last month — would be the highest since 2013. The yield on 10-year Treasuries extended declines on Friday below 0.9% to a record.The global advance of the coronavirus has shaken confidence across major economies, prompting central bankers to proffer stimulus measures, including lower interest rates. In addition to the Federal Reserve’s emergency cut this week, Canada and Australia also eased.The latest market ructions come after signs the coronavirus is spreading further in the U.S. More than 2,000 people in New York are in self-quarantine, according to a New York Times report.Gold’s ascent has come as investors plowed more funds into bullion-backed exchange-traded funds. Global holdings stand at a record, headed for an eighth weekly expansion.On other precious metals, silver, platinum and palladium all dropped.To contact Bloomberg News staff for this story: Martin Ritchie in Shanghai at mritchie14@bloomberg.netTo contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Jake Lloyd-Smith, Jason RogersFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Gold has reached a 7-year high following the biggest weekly gain in more than six months.