Wednesday, 20 September 2017

What’s next? – GOLD, OIL 20.09.17

Posted by Anonymous at 11:45 Labels:

GOLD

Gold prices were trading higher in early Asian trading on Wednesday, with investors looking ahead to a key US policy review as an opportunity to better understand Fed’s position on further rate hikes and the plan to unwind the regulator’s massive balance sheet.

On the Comex division of the New York Mercantile Exchange, gold futures were trading 0.44 percent higher at $1,316.40 a troy ounce as of 05:30 GMT.

The yellow metal displayed a flat dynamic late Tuesday, as President Donald Trump spoke for the first time at the United Nations, addressing world leaders on important matters.

Trump configured his speech to emphasize that the US is trying to solve the North Korean crisis by peaceful terms. However, he warned that if Kim Jong Un’s regime warned the US anyhow, they will “totally destroy” the Asian nation to defend themselves and their allies.

Despite the strong rhetoric used by President Trump, market participants did not immediately fly into safe-havens, like we’ve seen in the last couple of weeks. Instead, they opted for a cautious positioning ahead of Fed’s September monetary policy meeting.

There are no expectations for rate moves this time. Therefore, attention will be directed to Chairwoman Janet Yellen’s press conference afterwards and any news regarding Fed’s plan to reduce its massive $4.5 trillion balance sheet over the next few months.

According to Fed funds tracked by CME Group’s FedWatch tool, traders are currently pricing in a 56.4 percent probability of a 25 basis points rate hike by December.

The precious metal is a dollar-denominated commodity and one of the most popular safe-haven assets. Those factors make gold very sensitive to changes in US monetary policy.

OIL

Oil futures edged up in early trading hours on Wednesday following the release of upbeat industry estimates on US crude and refined product inventories.

The US West Texas Intermediate crude futures were trading 0.54 percent higher at $50.17 per barrel as of 05:40 GMT, while the London-based Brent contracts were up 0.27 percent to trade at $55.29 per barrel on the ICE Futures Exchange.

The American Petroleum Institute (API) reported a 1.4 million barrels increase in crude stockpiles for the week ended September 15, below an estimated build of 2.925 million barrels.

Data also showed declines of 5.1 million barrels and a 6.1 million in gasoline and distillate products. Analysts had forecasted reductions of 2.025 mb and 1.175 mb respectively.

Official inventories for the United States will be released as of 14:30 GMT on Wednesday by the Energy Information Administration. API and EIA are not always correlated.

Despite a weaker than expected rise of crude stocks last week, crude benchmarks came under pressure as data suggested a third straight weekly increase.

Previously, markets were modestly cheered by remarks from Iraqi Oil Minister Jabar al-Luaibi, who pointed out his country and other OPEC producers are considering extending the production cuts agreement beyond its March 2018 deadline. The minister also explained that the possibility of raising the volume of reductions is still on the table.

OPEC and non-OPEC countries agreed to extend output cuts for a nine-month period back earlier this year, but left the production cuts volume target at 1.8 million barrels per day.

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