Tuesday, 7 February 2017
What’s next? – GOLD, OIL 08.02.17
Gold prices edged down in Asian session on Wednesday as political uncertainty slowly disappears, opening the way for risky assets.
On the Comex division of the New York Mercantile Exchange, gold for April delivery fell 0.10 percent to trade at $1,234.90 an ounce as of 06:30 GMT.
Safe-haven assets such as gold gained last week on increasing political concerns in the United States and abroad. Tension between the Trump administration and Iran for an unauthorized ballistic missile lead to new economic sanctions targeting 25 Iranian individuals and entities.
Meanwhile, the government continues a legal fight to impose an executive order that forbids immigration from seven muslim-majority countries. A Seattle federal judge blocked Trump’s action partially last week and pushed the administration to retreat.
Yesterday, the US trade balance came in at -$44.30 billion vs a forecast of -$45.00 billion. The trade deficit prompted up by 0.4 percent in December. Job openings were below expectations at 5.501 million against 5.568 million seen.
Later in the day, investors will be focusing again on Washington’s agenda. The economic calendar remains quite empty in the US. Also, the Reserve Bank of New Zealand will finish its monetary policy meeting with a press conference. The benchmark rate is expected to be left steady at 1.75 percent, but markets will pay attention to RBNZ Governor Wheeler speech.
Oil prices sank in Asian hours on Wednesday as an industry report showed a much larger-than-expected build in US crude and refined product inventories last week, while investors look ahead of official data later in the day.
US West Texas Intermediate oil futures traded at $51.74 a barrel on the New York Mercantile Exchange, down 0.82 percent from its prior settlement. The London-based Brent crude oil futures dropped 0.47 percent to $54.79 a barrel as of 07:05 GMT.
On Tuesday, the American Petroleum Institute (API) estimated that crude oil stockpiles added a totally unexpected 14.23 million barrels in the week ended February 3.
According to the report, gasolines inventories were 2.9 million barrels higher than the previous reading. Distillates increased by 1.37 million barrels, while Cushing crude rose by 624,000 barrels, marking its first build in five weeks.
The US Energy Information Administration is set to release official data on Wednesday, with analysts pointing at 2.38 million barrels build. If the report shows figures similar to the ones API released, crude prices might start feeling a stronger pressure in the near future.
Oil prices have been trading around the $50 mark as market players digested sings that the output cut agreed between OPEC and non-OPEC countries is actually working. These producers are expecting to reduce 1.8 million barrels per day until June, which accounts for nearly 2 percent of global crude output.
However, Baker Hughes oil rig count shows that US drillers have been turning on their engines and increasing production in the wake of OPEC’s agreement. Since mid-2016, US oil production has risen by more than 6 percent. Such behaviour could derail OPEC’s efforts to rebalance demand and supply forces and put prices under considerable pressure again.
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