Commodity wrap: oil may hit $100; gold set for weekly loss

The crude oil price trajectory is increasingly indicating that the commodity may breach the $100 per barrel mark in the coming days as hostilities continue in the Middle East. 

Oil prices hit their highest level in nearly two years on Friday, with West Texas Intermediate surging past $86 and Brent hitting nearly $90 a barrel. 

Meanwhile, gold and silver prices were largely flat, but headed for weekly losses on inflation concerns. 

Oil eyeing triple-digit price

Crude oil prices were on track for their most significant weekly surge since the turbulent period of the COVID-19 pandemic in spring 2020. 

This substantial gain on Friday was driven by the ongoing conflict in the Middle East, which has resulted in the suspension of shipping and energy exports through the critical Strait of Hormuz.

This week saw a significant spike in crude oil futures: Brent crude surged by 23%, marking its largest jump since the record OPEC+ production cuts in May 2020 led to a recovery from pandemic lows. 

Similarly, WTI experienced its biggest gain since April 2020, rising by almost 29%.

WTI hit a near two-year high of $86.69 per barrel, while Brent crude hit $89.50 per barrel, its highest level since April 2024. 

The prospect of all Gulf energy producers halting exports within weeks, according to an interview with Qatar's energy minister published on Friday, is expected to drive oil prices to $150 a barrel.

"Qatar expects all Gulf energy producers to shut ​down exports within weeks and drive ‌oil to $150 a barrel,” the country's Energy Minister Saad al-Kaabi told the Financial Times in an ​interview published on Friday.

The closure of the Strait of Hormuz has severely impacted the global oil market. 

Approximately 20% of the world's daily oil demand typically passes through this vital waterway.

With the Strait having been closed for seven days, an estimated 140 million barrels of oil—equal to about 1.4 days of global demand—have been prevented from reaching the market.

Bullion heads for weekly losses

Gold and silver prices were largely steady at the time of writing, but the precious metals are still set for a weekly decline.

This is due to concerns over inflation diminishing expectations for interest rate cuts.

The US Federal Reserve policymakers are scheduled to meet on March 18, and market expectations, based on the CME Group's FedWatch tool, suggest they will likely keep interest rates unchanged.

Gold prices, after a robust opening in Asian Pacific trade, have steadily retreated from their peak, falling below the $5,100 mark by late morning in Europe. 

The week started with gold trading above $5,400.

The metal received an unexpected surge over the weekend as investors responded to news of the joint US-Israeli action against Iran, but this rally was reversed by a sudden appreciation in the US dollar.

The gold price dropped nearly 8% in just over a day, briefly falling below the $5,000 level. 

Although it has since recovered, it has struggled to break and maintain a position above $5,200, resulting in a slight loss of its upward momentum.

“It needs to break back above here convincingly to reinvigorate the bulls. Otherwise, a break of support at $5,000 could lead to a much deeper pullback,” said David Morrison, senior market analyst at Trade Nation. 

Silver has experienced a period of unusual stability since Tuesday afternoon, moving largely sideways. 

Excluding a few minor spikes, its trading has been restricted to a tight range: a low of $81 and a high of $85. For a metal known for its volatility, this represents a notably calm few days.

“This market behaviour could presage a significant move soon. Unfortunately, it’s difficult to predict in which direction that may be,” Morrison said.