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Crude oil and gold review
Crude oil and gold review 2010-09-09
Crude oil
On Wednesday, crude oil futures closed higher, although the US FRS report showing a slowdown in economic growth caused a decline in crude futures from levels above $75/barrel.
On the NY Mercantile Exchange, light sweet crude futures for October delivery went up 58 cents or 0.8% to $74.67/barrel. Brent futures rose 43 cents to the level of $78.17/barrel.
After an increase in the early session, oil prices dropped back from a session high of $75.39/barrel amid a report from the Fed that said the U.S. economic recovery was showing "widespread signs of a deceleration." The report was contained in the central bank's latest beige book and added the list of recent government data and other indicators of a still-struggling economy.
While supplies of oil and fuel products are at the highest levels in 27 years, traders are expecting signs from the economy about the strength of future crude oil demand.
In recent weeks, the data have been mixed. The Institute for Supply Management's manufacturing index last week came higher than anticipated. This was an important sign for oil as the manufacturing sector is traditionally a heavy user of energy. Meanwhile, the U.S. continued to lose jobs in August, though at a slower rate than forecast.
The conflicting economic data have left oil prices stuck in a narrow range between about $70 and $80/barrel as investors looked at other markets for indications of price direction.
Crude oil has been closely correlated with the stock market in recent months. Rise in equities Wednesday also helped crude oil prices to settle higher. High inventories and an uncertain economic outlook have kept crude oil prices from edging much above $80/barrel. However, traders are wary of pushing oil price below $70, especially due to hopes of the economy improvement and with an Atlantic hurricane season that could quickly reduce stockpiles, if a storm affects Gulf of Mexico oil producers.
Crude-oil inventories are seen rising by 1,000,000 barrels, according to an economic forecast. Gasoline stocks are expected to show an 800,000-barrel drop, while distillates, which include heating oil and diesel fuel, are seen rising by 500,000 barrels.
Gold
Easing in worries regarding Europe sovereign debt decreased investor demand on gold as a safe-haven asset and gold futures slightly edged down on Wednesday.
December gold futures declined $1.80 or 0.1% to $1257.50/ounce. However, a session low of $1264.70 is a little bit below an intraday high for the most traded futures $1266.50 attained in June.
On the previous session, gold futures closed at a record level of $1259.30 an troy ounce after a report in Wall Street Journal that stress-tests understated a rate of potentially risky debt obligations.
However, on Wednesday, American equities and industrial raw commodity prices edged higher with traditional safe-haven assets such as gold, the US dollar and the Japanese yen fell on easing speculations about the European banks condition. It happened after the auction on Portugal 3 and 10-year bonds, which were well-demanded.
Gold is frequently taken as a safe-haven asset because it does not strongly correlated to economic cycles as industrial raw commodities or equities.
Despite a slight drop on Wednesday, gold prices stay high, as investors are still nervous about European banking system and a recovery pace of the global economy.
Performed by Vladimir Donin, Analytical expert
InstaForex Companies Group © 2007-2010
Crude oil and gold review 2010-09-09
Crude oil
On Wednesday, crude oil futures closed higher, although the US FRS report showing a slowdown in economic growth caused a decline in crude futures from levels above $75/barrel.
On the NY Mercantile Exchange, light sweet crude futures for October delivery went up 58 cents or 0.8% to $74.67/barrel. Brent futures rose 43 cents to the level of $78.17/barrel.
After an increase in the early session, oil prices dropped back from a session high of $75.39/barrel amid a report from the Fed that said the U.S. economic recovery was showing "widespread signs of a deceleration." The report was contained in the central bank's latest beige book and added the list of recent government data and other indicators of a still-struggling economy.
While supplies of oil and fuel products are at the highest levels in 27 years, traders are expecting signs from the economy about the strength of future crude oil demand.
In recent weeks, the data have been mixed. The Institute for Supply Management's manufacturing index last week came higher than anticipated. This was an important sign for oil as the manufacturing sector is traditionally a heavy user of energy. Meanwhile, the U.S. continued to lose jobs in August, though at a slower rate than forecast.
The conflicting economic data have left oil prices stuck in a narrow range between about $70 and $80/barrel as investors looked at other markets for indications of price direction.
Crude oil has been closely correlated with the stock market in recent months. Rise in equities Wednesday also helped crude oil prices to settle higher. High inventories and an uncertain economic outlook have kept crude oil prices from edging much above $80/barrel. However, traders are wary of pushing oil price below $70, especially due to hopes of the economy improvement and with an Atlantic hurricane season that could quickly reduce stockpiles, if a storm affects Gulf of Mexico oil producers.
Crude-oil inventories are seen rising by 1,000,000 barrels, according to an economic forecast. Gasoline stocks are expected to show an 800,000-barrel drop, while distillates, which include heating oil and diesel fuel, are seen rising by 500,000 barrels.
Gold
Easing in worries regarding Europe sovereign debt decreased investor demand on gold as a safe-haven asset and gold futures slightly edged down on Wednesday.
December gold futures declined $1.80 or 0.1% to $1257.50/ounce. However, a session low of $1264.70 is a little bit below an intraday high for the most traded futures $1266.50 attained in June.
On the previous session, gold futures closed at a record level of $1259.30 an troy ounce after a report in Wall Street Journal that stress-tests understated a rate of potentially risky debt obligations.
However, on Wednesday, American equities and industrial raw commodity prices edged higher with traditional safe-haven assets such as gold, the US dollar and the Japanese yen fell on easing speculations about the European banks condition. It happened after the auction on Portugal 3 and 10-year bonds, which were well-demanded.
Gold is frequently taken as a safe-haven asset because it does not strongly correlated to economic cycles as industrial raw commodities or equities.
Despite a slight drop on Wednesday, gold prices stay high, as investors are still nervous about European banking system and a recovery pace of the global economy.
Performed by Vladimir Donin, Analytical expert
InstaForex Companies Group © 2007-2010
