Thursday, 29 June 2017

What’s next? – GOLD, OIL 29.06.17

Posted by Anonymous at 10:32 Labels:

GOLD

Gold prices were higher in Asian trade on Thursday, as investors looked ahead of key economic reports in the United States, while uncertainty concerning the future of monetary policy continued to weigh on market sentiment.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were trading up by 0.30 percent at $1,252.80 a troy ounce as of 06:30 GMT.

In the light of weaker-than-expected economic data, the dollar continued to lose ground across the board. The US dollar index, which tracks the greenback against a basket of currencies, was trading at 95.57, down 0.18 percent by the time of this writing.

A weaker dollar boosted greenback-denominated gold and other commodities as it makes the metal less expensive for investors holding foreign currencies.

Despite this situation, Fed funds CME Group’s FedWatch tool show that market players are pricing in a 47.5 percent probability of a rate move in December.

The US Senate recently decided to postpone voting on a bill to repeal and replace the so-called Obamacare. The American Health Care Act is one of President Trump’s key campaign promises but he has been facing strong resistance within his own party to pass it.

Analysts have pointed out that expectations for a third rate this year will move depending on the result of Friday’s inflation report, which will also affect strength of the dollar and gold.
OIL

Oil prices moved higher on Thursday, marking a 6th consecutive session of increases despite official data confirmed that crude inventories rose last week.

The US benchmark West Texas Intermediate oil futures traded at $44.92 a barrel, up 0.40 percent from its prior close. Meanwhile, the London-based Brent crude oil futures fell 0.34 percent to trade at $47.47 a barrel as of 06:50 GMT.

The Energy Information Administration said crude stockpiles grew 118,000 barrels in the week ended June 23, against expectations for a 2.585 million barrels decline.

A day earlier, the American Petroleum Institute (API) anticipated an addition of 851,000 barrels in crude inventories. Although this figure is much higher, it shows positive correlation in data.

The EIA’s report also showed that weekly production decreased by 100,000 barrels per day to 9.3 million barrels per day, which is the largest weekly output reduction since mid-2016.

Gasoline supplies, on the contrary, fell by 900,000 barrels, which contradicts API’s data. The industry report said 1.4 million barrels were added in the previous week.

Market analysts noted that the Tropical Storm Cindy affecting operations in the Gulf of Mexico and some maintenance work in Alaska could be the reason for this week’s output decline.

Doubts still remain in place concerning the OPEC-led efforts to counteract the ongoing supply overhang. The organization insists that rather soon the effects of its output agreement will be evident, but so far nothing has really happened and that worries investors.

OPEC and non-OPEC producers agreed to extend production cuts of 1.8 million barrels per day for a nine-month period until March 2018. The oil cartel also said it would not rush into taking further steps to support oil prices.

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