SMM Comment: Oil Erases Gains after Remarks by US Energy Secretary, SHFE and LME Base Metals Mostly Rise, Ferrous Metals also Outperform

SHANGHAI, Jun 6 (SMM) - Crude oil: Near noon, crude oil futures fell slightly. As of CST 11:36, WTI fell 0.29%, and Brent oil fell 0.18%. The rally, sparked by OPEC's announcement to extend production cuts until the end of 2024 and Saudi Arabia's surprise announcement to cut output by 1 million barrels per day in July, has faded.

At present, OPEC's crude oil output accounts for about 40% of the global total. U.S. Energy Secretary Granholm said on Monday that the U.S. is keeping an eye on oil prices following Saudi Arabia's decision to cut oil production and will work with producers and consumers to ensure lower prices.

Market participants are now waiting to see whether the Federal Reserve will raise rates in June or keep them on hold for more clues on the deal. Higher interest rates could dampen energy demand.

US dollar: The U.S. dollar fell slightly near noon. As of CST 11:36, the U.S. dollar index was at 103.96, down 0.05%. Data on Monday showed the U.S. services sector barely grew in May as new orders slowed, boosting expectations that the Federal Reserve may pause interest rate hikes this month. The U.S. services sector barely grew in May as new orders slowed and a measure of business input prices fell to a three-year low, an Institute for Supply Management (ISM) survey showed, which could help the Fed fight inflation. Market generally expects the Fed to skip a rate hike on June 14, but market players appear unsure whether the policy statement will be skewed towards a hawkish or dovish tone.

Metal market: Base metals on the SHFE mostly rose at mid-day’s close. Zinc (+1.17%) led gains, while copper rose 1.15%, nickel, tin and lead inched higher. Only aluminum fell 0.68%.

Ferrous metals closed with gains. Iron ore rose 1.21%, HRC rose 0.88%, and stainless steel rose 1.26%. Coking coal rose 1.17%, and coke rose 2.51%.

As of CST 11:36, LME base metals also generally rose. Zinc rose 0.9%, tin rose 0.65%, nickel rose 0.62%, and lead rose 0.17%. Copper fell 0.02%, and aluminum fell 0.22%.

In terms of precious metals, as of CST 11:36, COMEX gold rose 0.08%, and COMEX silver rose 0.21%.