Wednesday, 28 June 2017

What’s next? – GOLD, OIL 28.06.17

Posted by Anonymous at 10:15 Labels:

GOLD

Gold prices edged higher in Asian hours on Wednesday, as markets prepared for fresh comments from central bank leaders and economic reports in the United States.

Traders are opting for a wait-and-see positioning ahead of today’s economic events, especially looking at ECB President Mario Draghi speech at 13:30 GMT. Bank of Japan and Bank of England Governors Kuroda and Carney are also expected to talk by that time.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were trading up by 0.38 percent at $1,251.60 a troy ounce as of 06:50 GMT.

The US dollar index, which tracks the greenback against a basket of rivals, was at 96.03, down by 0.07 percent by the time of this writing.

On Tuesday, the yellow metal rebounded from six-week lows following hawkish remarks from ECB’s Draghi, who explained that an eventual tightening of the regulator’s monetary policy would be very gradual.

Traders also paid attention to Fed Chair Janet Yellen, although she provided with no news at all, reiterating the normalization process would have to be slow and rates would need to stay low by historical standards for quite some time.

Bullion prices rallied on the back of these comments. According to CME Group’s FedWatch tool, investors are pricing in more than a 40 percent chance of a rate move in December.
OIL

Oil futures were slightly down in early trading on Wednesday as market participants digested an industry report showing a new increase in crude and gasoline supplies and as players awaited official data from the US Energy Department later in the session.

The US benchmark West Texas Intermediate oil futures traded at $44.03 a barrel, down 0.47 percent from its prior close. Meanwhile, the London-based Brent crude oil futures fell 0.24 percent to trade at $46.54 a barrel as of 06:40 GMT.

The American Petroleum Institute said crude inventories added 851,000 barrels in the week ended June 23, leaving the total count at 509.5 million barrels. Analysts had estimated a 2.6 million barrels decline.

The report also showed gasoline stockpiles moving up by 1.4 million barrels, once again ignoring the start of the US summer driving season.

These figures increased concerns about OPEC’s ability to fight the ongoing supply overhang that’s been weighing on quotes in the last three years. Investors are losing faith that the oil cartel output reduction plan can actually turn around the worsening price scenario.

OPEC and non-OPEC producers committed to extend the output cuts of 1.8 million barrels per day from January 2017 to March 2018. However, there hasn’t been so far any signs that the deal actually made an impact on crude prices.

In this context, big banks are scaling down their projections for both the WTI and the Brent crude contracts. If to look at how traders have positioned themselves in the last few months, we clearly see that they were hoping for a price rally, which never really came into action.

The US Energy Information Administration will release its weekly inventory report on crude and refined products as of 14:30 GMT. Expectations are pointing to a 2.585 million barrels decline.

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