Central banks increased their gold reserves by a net 12 tonnes in April, a 12% decrease compared to March and below the 12-month average of 28 tonnes, according to the latest data from the World Gold Council. While central bank gold buying remains a steady trend, the pace has slowed as prices reached record highs. April marked the second consecutive month of slower accumulation in the market.
Gold prices have surged by approximately 27% year-to-date, peaking at a record $3,500 per ounce in April. The price rise has been driven by geopolitical risks, the ongoing global trade war, and central bank purchases. In the first quarter, central banks collectively bought 244 tonnes of gold.
Poland continues to lead the charge as a major buyer. In April, the National Bank of Poland added another 12 tonnes to its gold reserves, bringing its total to 509 tonnes, surpassing the gold reserves held by the European Central Bank, which currently stands at 507 tonnes.
Despite the slower pace of purchases, central banks are expected to continue adding to their gold reserves amid ongoing economic uncertainty and a global effort to diversify away from the U.S. dollar.
Energy – OPEC Production Increases in May
Crude oil prices have risen, with ICE Brent reaching its highest level since mid-May, trading just under $66 per barrel. This price hike was partly fueled by wildfires in Alberta, Canada. Meanwhile, the market is adjusting to the announced OPEC+ supply increase scheduled for July. There are clear signs of tightness in the spot oil market as the Northern Hemisphere summer approaches, with both Brent and WTI prompt timespreads strengthening recently. Trading has entered deep backwardation, reflecting supply concerns.
Supply risks from the Alberta wildfires appear to be easing, at least temporarily, due to rainfall. Canadian oil producer Canadian Natural Resources has restarted production at one of its sites after halting operations last week due to the fires. However, forecasts for drier and warmer weather later this week could renew supply challenges.
Preliminary data from a Bloomberg survey indicate that OPEC’s oil production increased by 200,000 barrels per day (b/d) month-on-month in May, reaching a total of 27.54 million b/d. This increase was less than OPEC’s share of the overall 411,000 b/d supply hike agreed upon by the OPEC+ group. Some OPEC members were already producing above their targets, which limited the actual supply increase in the market. Additionally, some members, including Saudi Arabia, fell short of their production targets. Following significant supply hikes for June and July, OPEC’s output is expected to continue rising in the coming months.
Inventory data released by the American Petroleum Institute (API) shows a decrease in U.S. crude oil inventories by 3.28 million barrels for the week. However, the balance of inventory figures is somewhat bearish. Stocks at Cushing increased by 952,000 barrels, while gasoline and distillate inventories grew by 4.73 million barrels and 761,000 barrels, respectively.
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