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COMMODITIES

Crude oil costs post over 10% misfortunes in about fourteen days

Brent lost 6.6% for the week, adding to the previous week’s drop of 5.3%.

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Unrefined petroleum costs shut with a second seven day stretch of misfortunes, which left the vitality market somewhere around over 10%, in the course of recent weeks.

The slide comes higher than the anticipated rough Inventories on the planet’s biggest economy, and caused uneasiness among oil merchants previously worried about gas request, as the northern half of the globe head for winter.

West Texas Intermediate rough, the significant benchmark for U.S. unrefined costs, settled the day up WTI lost 6.1% w/w, broadening a week ago’s drop of 7.5%.

Brent rough, the worldwide global benchmark for oil, shut the New York exchanging meeting at $39.83. Brent lost 6.6% for the week, adding to its earlier week’s drop of 5.3%.

A week ago’s dive came after the Energy Information Administration (EIA), detailed a week after week unrefined stock increase of 2 million barrels, over the 1.3 million barrels foreseen before by experts.

It was the principal flood in oil stores since mid-July. In six earlier weeks, the EIA had announced a complete unrefined drawdown of in excess of 38 million barrels.

Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to our source, talked on the overall large scale oil dealers are responding to. He said;

“However, there is light at the end of the vaccine tunnel, as AstraZeneca’s COVID-19 trials may resume next week, according to some news reports. The drugmaker had suspended its vaccine trials, after an unexplained illness of a UK participant. And this pivot is being consumed on the positive side of the ledger.

“In reality, prices above Brent $45/bbl were getting ahead of the recovery, as most of the low hanging bullish fruit had been consumed.

“And traders simultaneously found themselves at the end of the bullish runway running headlong into one of the biggest price impediments of them all – the ‘end of summer’ seasonality waning demand.

“Markets shifted into what can’t go up, must go down mode, as profit-taking initially got the ball rolling downhill, then all the rest of the known pilled on top.”

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COMMODITIES

Oil prices plunge on fears OPEC+ may increase Oil supply

Oil traders are becoming wary that OPEC+ will increase oil output and further distort the energy demand/supply dynamics.

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Oil prices lost more than a percent at the second trading session of the week. Oil traders are virtually going to extend short on concern that OPEC may agree to increase global supply in a meeting this week and Chinese demand may be dropping.

At the time of writing this report, Brent crude dropped by 1.2%, to trade at $62.91 after losing 1.1% in the past day. U.S. West Texas Intermediate (WTI) crude dropped by 1.2%, to trade at$59.90 a barrel, having lost 1.4% on Monday.

Oil traders are becoming wary that OPEC and its allies, a group often referred to as OPEC+, will increase oil output and further distort the energy demand/supply dynamics.

The group meets is scheduled to hold on Thursday as discussions might include allowing as much as 1.5 million barrels per day of crude oil back into the market.

Stephen Innes, Chief Global Market Strategist at Axi in a note to our source  explained why the OPEC+ meeting matters most to many oil traders.

“Constructive oil market fundamentals have blown slightly off course ahead of the OPEC + meeting on Thursday as oil prices took to the plunge pool overnight, with Brent back to the soft US$63 handle after trading as high as $66.82 only last Thursday.

“Commodities were mostly weak overnight as the dollar regained a bit of ground. OPEC+ will meet this Thursday, and expectations are that despite Saudi Arabia’s call for caution, most members will push for an increase in output,” Innes stated.

Bottom line: energy pundits expect the all-important meeting this week in being one of the most interesting oil meetings in Q1, with Saudi Arabia urging producers to remain “extremely cautious”.

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COMMODITIES

Gold posts worst monthly decline since 2016, as U.S dollar keeps rising

The precious metal posted its worst monthly decline since 2016 as gold prices broke below the $1,750 support.

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Gold has of late been under immense pressure, as the Dollar Index surged to a one-week high of 90.8. The safe-haven currency is an outright alternative to gold and typically pressures gold when it gains.

The precious metal posted its worst monthly decline since 2016 as gold prices broke below the $1,750 support at the last trading session of the week, following most commodities and global stocks lower for a second straight day as global investors readjusted their portfolios.

With Friday being the last trading session for the month of February, it wrapped up the month with a 6.6% decline, its worst since a 7.2% decline in November 2016.

Gold for April delivery lost about 2.6% to settle at $1,728.80 per ounce. It earlier plunged to $1,715.05, its lowest point since a June 8 bottom of $1,700.10.

For the week, the precious metal contract lost about 2.7% in value, following through with the previous week’s drop of 2.5%.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to our source, spoke on other prevailing macros weighing heavily on gold prices

“The rise in real yields has seen gold under pressure with everyone selling. Although positioning is cleaner, the overall market is still long, and ETF selling negatively affects the market on actual position clean out rather than just speculative sell-off. Which is more worryingly an early sign of a capitulation.”

Bottom Line

Gold traders are not keen on going bullish, at least for the near term, on the bias that rising U.S Treasury yields see investors showing less interest in the yellow metal.

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COMMODITIES

Gold maintains shine after advancing for two days

The bullion asset regained its lustre after a 2.2% drop recorded in the past week,

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Gold stayed on course at the second trading session of the week after advancing for two days, as metal traders awaited testimony from U.S Fed Chief, Jerome Powell.

At the time of drafting this report, the bullion asset traded at $1,807.24 an ounce after rising 1.9% over two days.

The U.S Fed Chief’s semi-annual report at the U.S congress today and the next day will be monitored by metal traders for further policy guidance, and his assessment of the economic recovery at the world’s largest economy.

The bullion asset regained its lustre after a 2.2% drop recorded in the past week, as traders refocus on rising inflation expectations.

In an explanatory note to Our source, Stephen Innes, Chief Global Market Strategist at Axi, gave valuable insights on how the precious metal managed to stay above the $ 1,800-ounce price level.

“It was a strange world seeing the commodity locomotive racing at full steam, but gold left-back at the station. But correlations are looking more normal today after yesterday morning signal gold was trading slightly higher in delayed response to USD weakness. A weaker US dollar remains one of the primary lift-off balloons.

Gold built on Friday’s modest rally, clearing and holding above the USD1,800/oz level. USD weakness was likely the key factor behind gold’s recovery.”

What to expect: The U.S congress may vote on the US$1.9 trillion stimulus package in the coming days, which should hold gold’s appeal as inflation concerns and reflation appeal suggest gold is a good hedge.

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