Oil prices edged higher on Friday as signs of a growing global supply surplus and easing concerns over further military escalation in the Middle East weighed on the market.
Meanwhile, US producer inflation rose less than expected in October, although persistent price pressures continued to complicate the Federal Reserve’s policy outlook.
Oil prices head for second weekly decline
Oil prices gained on Friday; however, Brent and West Texas Intermediate (WTI) crude are on track for a second consecutive weekly decline.
Brent futures fell 0.13% to $95.94 a barrel, while WTI declined 0.09% to $88.81.
Both benchmarks were set to lose around 2% for the week, following declines of 16% and 13%, respectively, in the previous week.
The market has shifted from concerns about supply shortages to fears of a potential surplus.
An International Energy Agency report released on Friday pointed to an increase in the global oil surplus, while lower geopolitical risks also weighed on prices.
US crude and fuel inventories also increased last week, reflecting softer demand for refined products and higher oil imports, according to the Energy Information Administration.
However, risks to shipments through the Strait of Hormuz remain.
Iran’s military said four oil tankers were hit by explosions in the waterway on Thursday, while Yemen’s Iran-backed Houthis claimed attacks on Saudi oil infrastructure.
US PPI rises less than expected in October
US wholesale prices increased 0.3% in October, below the 0.4% forecast by economists surveyed by Dow Jones, according to the Bureau of Labor Statistics.
Core PPI, which excludes food and energy, also rose 0.3%, in line with expectations.
However, the annual headline rate accelerated to 6.5%, its highest level since November 2022.
Goods prices were a major contributor to the increase.
Final demand goods prices rose 0.5% during the month, while the goods index increased 10.2% year over year, its largest annual gain since October 2022.
Services prices rose 0.2%, with transportation and warehousing contributing to the increase. Truck freight transportation prices climbed 3.9%.
The figures offered some relief after consumer inflation also came in hotter than expected earlier in the week.
However, the annual acceleration in producer prices and broader cost pressures could complicate the Fed’s next decision.
Markets were pricing in a December rate increase, with the CME FedWatch tool showing an 87.7% probability of a 25-basis-point hike and a 12.3% chance of a 50-basis-point move.
Gold struggles despite softer PPI reading
Gold prices fell on Friday after the producer inflation report came in below expectations.
However, the modest recovery did little to offset the previous session’s steep losses.
Spot gold fell 0.03% to $3,875.14 an ounce, after briefly reaching $3,922.97 following the PPI release. US gold futures for December delivery fell 0.14% to 3,880.10.
Bullion fell 3% on Thursday, reaching a more-than-one-year low as higher oil prices and hotter-than-expected consumer inflation strengthened concerns about interest rates remaining elevated.
Gold was down around 4.5% for the week, putting it on course for its worst weekly performance since early June.
Higher interest rates tend to reduce the appeal of non-yielding assets such as gold. Silver and platinum also declined on Friday, while palladium advanced.
Tesla and SpaceX merger talks gather pace
Tesla and SpaceX could announce a merger as soon as December, according to a Bloomberg report published on Thursday.
The potential deal would combine Tesla’s electric vehicles, energy storage and robotics businesses with SpaceX’s rockets, satellites and artificial intelligence operations.
Based on their valuations of more than $1.9 trillion and around $1.5 trillion, respectively, the combined company could be worth approximately $3.4 trillion to $3.5 trillion.
Boards and advisers are reportedly discussing the terms, including the exchange ratio for Tesla shareholders and the governance structure.
An announcement could still be delayed until early 2027.
Elon Musk, who leads both companies and is their largest shareholder, has previously described a merger as a good idea, citing potential synergies in AI, chip design, robotics and orbital computing.
However, significant hurdles remain.
Tesla’s China business, which accounts for roughly 20% of its revenue and a larger share of its earnings and free cash flow, could complicate the transaction.
JPMorgan has identified Chinese regulatory approval as the biggest obstacle.
Any deal would also require clearances across multiple jurisdictions and approval from Tesla shareholders, while the special committees overseeing discussions must demonstrate that their decisions serve shareholders’ interests.
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