What’s next? – OIL, GOLD 15.02.18

GOLD

Gold futures were lower in early trading hours on Thursday, with market participants looking ahead to further economic data to measure its impact on the dollar.

On the Comex division of the New York Mercantile Exchange, gold futures were down 0.07 percent at $1.357.10 a troy ounce as of 05:50 GMT.

The yellow metal traded sharply higher in late hours on Wednesday as a weaker dollar continued to support commodity prices following an unconvincing inflation report from the United States.

The US dollar index, which measures the greenback against six major currencies, was trading 0.21 percent lower at 88.82 by the time of this writing.

The dollar-denominated metal is sensitive to changes in the US currency. A weaker greenback makes the metal more attractive for investors holding foreign currencies.

On Wednesday, the US Labor Department said its Consumer Price Index notched up 0.5 percent in Jan, above a prior month 0.2 percent build. On yearly basis, prices gained 1.8 percent.

In other news, the Commerce Department reported a 0.3 percent drop in retail sales for the last month, against expectations for a 0.3 percent increase.

Following these results, investors began to worry about inflation strength and some decided to let go their long positions. In addition, sentiment was under pressure after JPMorgan revised its GDP forecast for the first quarter of this year to 2.5 percent from 3 percent.

Ahead in the day, traders will keep an eye on the producer price index for January and initial jobless claims at 13:30 GMT. By that time, the NY Empire State and Philadelphia Fed manufacturing indexes will be out too.

Industrial production figures for the previous month will be released at 14:15 GMT. TIC net long term transactions for December are scheduled at 21:00 GMT.

OIL

Crude oil prices were higher in early Asian hours on Thursday, with investors continuing to digest official inventory data, while awaiting the weekly oil rig count.

The US West Texas Intermediate crude contracts were down 1.14 percent to $61.29 per barrel as of 05:50 GMT. Meanwhile, Brent futures added 0.99 percent to $65 a barrel.

Crude prices settled on a higher note as official crude inventories in the United States grew below forecast, reducing concerns among investors.

The US Energy Information Administration said crude stockpiles added 1.841 million barrels in the week ended February 9, against expectations for a 2.825 million barrels build.

The report also showed gasoline supplies rising by 3.599 million barrels, while analysts had anticipated an increase of 1.229 million barrels. Distillate products dropped by 459,000 barrels, less than a forecasted decline of 1.130 million barrels.

Refiners are currently in a period of maintenance, which usually translates into higher gasoline inventories. Despite US shale producers trying to take advantage of higher prices, movements in the sector are still slow and prospects for crude benchmarks remain positive.

In other news, Saudi oil minister and OPEC’s de-facto leader Khalid al-Falih said on Wednesday that the cartel will continue to limit production even if that causes a supply shortage.

"If we have to overbalance the market a little bit, then so be it," said Al-Falih.

His remarks came in response to a downbeat monthly report by the Paris-based International Energy Agency, which suggested rising US production would derail OPEC-led efforts.

“All the indicators that suggest continued fast growth in the US are in perfect alignment; rising prices leading, after a few months, to more drilling, more completions, more production, and more hedging," the IEA’s report said.

FortFS