Demand for the metal is expected to exceed supplies for a third straight year in 2014, with demand forecast to exceed supply by some 1.6 million ounces in 2014, up from a deficit of 371,000 ounces last year according to Johnson Matthey. South Africa and Russia between them accounted for close to 80 percent of world palladium supply last year.
Among other precious metals, gold fell to its lowest in 18-weeks on May 28 as investors reduced their holdings of the precious metal amid easing tensions over Ukraine and upbeat U.S. economic data.
Gold for June delivery on Comex settled at $1,259.30 an ounce, down $6.20 on the day and the lowest level for a most actively traded contract since Feb.7.
In recent weeks, the precious metal had found some support on worries over Russia’s involvement in Ukraine but Russia’s willingness to work with the newly elected Ukraine government has diminished for the time being gold’s safe-haven appeal for investors. The precious metal typically benefits at times of geopolitical uncertainty.
U.S. crude finds support in strong gasoline demand
Meanwhile, U.S. crude futures traded lower after topping $104 a barrel last week. West Texas Intermediate (WTI) for July delivery on Nymex hovered near a one-week low at midweek as the market anticipated a rise in U.S. crude inventories. But the U.S. benchmark subsequently gained ground after the U.S. Energy Information Administration (EIA) weekly oil status report showed strong demand for fuel. Last week, the EIA had confounded the market, reporting a 7.2-million barrel decline in crude stocks.
WTI for July delivery fell to $102.64 a barrel on May 28, the lowest since May 20, before settling at $102.72, down $1.39 on the day. But July WTI moved up to trade at S103.93 a barrel shortly after the EIA report was released on May 29, one day later than usual due to the Memorial Day holiday in the U.S. on May 26.
The government energy department data showed a 1.7-million barrel rise in the country’s commercial crude stocks for the week ended May 23, higher than was expected by the market. But motor gasoline product supplied over the four weeks to May 23 averaged 9.1 million barrels per day, a 5.4 percent increase on the same period last year. Total petroleum products supplied over the same four-week period were also 2.2 percent higher year-on-year at an average 19.1 million barrels a day.
Brent North Sea crude futures, the international benchmark, continue to be supported by the lack of supply from Libya and political tensions surrounding Ukraine. After moving up above $110 a barrel last week, July Brent on London’s ICE Futures Europe slipped below this level at midweek to close at $109.81 a barrel. But July Brent reclaimed $110 the following day to close at $110.10.
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