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Gold prices suffer worst weekly drop since September

For the week, it lost 3.4%, its highest for a week since late September.



Gold prices lost some of its blinks at last week’s trading session cumulatively. For the week, it lost 3.4%, its most for a week since late September.

What we know: New York-traded gold for December delivery settled up 0.7% at $1,886.20.

That said, its gain recorded in the last trading session, couldn’t prevent it from posting its worst weekly loss since September, triggered by early selling in the week after market hype that showed Pfizer’s COVID-19 Vaccine was, what the world was waiting for.

What this means: Investors’ of late have been trooping into riskier assets like global stocks on the bias that Pfizer’s COVID-19 vaccine would provide a lifeline to the world’s economy, triggering the precious metal to lose 4.5% at the early part of the week.

Investors’ over-exuberance with progress reported by Pfizer on its Covid-19 vaccine trials triggered a massive rally in risk assets on Monday that led to a 4.5% plunge in gold — the safe-havens worst day since August.

Stephen Innes, Chief Global Market Strategist at Axi, in his weekly closing remark hinted Nairametrics why the precious metal is presently under pressure.

“Gold remains an asset looking for a purpose. US Treasury yields dropped overnight. The dollar was relatively flat again. The EURUSD and Gold traded flat, so by all accounts, gold is little more than a mirror reflection of the EURUSD these days while trying to find a new narrative to ride between now and a possible inflationary wave later in 2021.

What to expect: In the midterm, gold prices will likely be supported on the reports showing the effect COVID-19 infections are having presently on the Northern Hemisphere, coupled with U.S president Trump legal battles on the recently concluded election.

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2022 global oil demand to hit 100.6 million BPD – OPEC



The Organisation of Petroleum Exporting Countries (OPEC) has forecasted that total global oil demand in 2022 will hit 100.6 million barrels per day, which will surpass pre-pandemic levels.

This was disclosed by outgoing OPEC Secretary-General, Mr Mohammad Barkindo on Monday at the 58th virtual Meeting of the Joint Technical Committee.

This comes after OPEC also revealed that global demand for 2021 was pegged at 96.5 million BPD.

The OPEC boss revealed world oil demand increased by 5.7 millioned BPD in 2021 and by 4.2 million BPD from December 2021, adding that recovery expected in the last quarter of 2021 would be felt in the first quarter of 2022, and proposed a lot more steady growth in 2022.

“In addition to closely monitoring the evolving impacts of Omicron variant, other factors to consider will be varying speed of vaccine rollouts worldwide; the uneven pace of economic growth across global regions; and continued supply chain disruptions.

“Additionally, rising inflationary pressures and potential central bank responses remain key factors that require close monitoring,” he said.

On supply side, OPEC said non-OPEC supply in 2021 was expected to grow by 700,000 b/d to average 63.7 mb/d, unchanged from December 2021, and in 2022 to grow at an average of 66.7 mb/d.

OPEC says it continued to monitor the potential near-term impacts if some leading consuming countries carry through with their announced plans to release an estimated 70 mb from their strategic oil reserves.

“Looking at inventories, preliminary data shows total OECD commercial stocks fell by 16mb m-om in November 2021 to 2.721 billion barrels, which is 389 mb lower than the same month one year ago and 211mb below the 2015-2019 average.

“As we usher in the sixth year of collaboration, we move forward with confidence knowing that this highly effective and well-reputed framework for multilateral energy cooperation will once again prove to be the way of the future for this industry,” he said.

OPEC also announced that Mr Haitham Al-Ghais would be the new Secretary-General effective from August 1, 2021. “Al-Ghais, a veteran of the Kuwait Petroleum Corporation (KPC) and Kuwait’s OPEC Governor from 2017 to June 2021, currently serves as Deputy Managing Director for International Marketing at KPC.

“He Chaired the Joint Technical Committee (JTC) of the Declaration of Cooperation (DoC) in 2017 and subsequently served as a Member of the JTC until June 2021,” it said.

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World’s biggest independent oil trader says prices will rise above $80 due to gas crisis



The world’s largest independent oil trader, Vitol Group, has said that it expects crude oil price to climb above $80 per barrel in the next couple of weeks.

This follows the expectation that the global crude oil demand will rise by an extra half a million barrels per day by winter due to global gas crisis which has led to rise in gas prices and driving a rush for other alternative sources of fuel.

This was made known by the Chief Executive Officer of Vitol, Russel Hardy, during an interview in London on Thursday, where he said that oil is most likely headed above $80 a barrel, partly as higher gas prices boost demand.

What the Vitol Chief Executive Officer is saying

Hardy said that this could force OPEC+ producers to add more supply into the market.

He said, “Can demand surprise us to the upside because of power switching? Yes,” Hardy said. “Is it likely that there’s half a million barrels a day of extra demand that comes through because of gas pricing? Probably our view is, that is likely across winter.

“All people are worried about is that we’re missing pieces of stock which we normally have,” he said. “During the winter, demand for gas is massively higher than demand for gas during the summer. You have to store, there’s no two ways around it.”

Hardy’s bullish sentiments echoes that of the Group Managing Director of NNPC, Mele Kyari, who predicted higher oil prices in the next 3 months and Goldman Sachs Group Inc., which is predicting higher crude oil prices, especially if the winter months are colder than normal.

In case you missed it

Recall that yesterday, the NNPC said that the supply crisis which has negatively affected the global natural gas market and has led to rising prices, could push up oil prices by as much as $10 a barrel, which is about $86 per barrel over the next 3 to 6 months.

The NNPC boss pointed out that the global gas crisis which has led to an increase in gas prices will make energy consumers seek fuel alternatives to natural gas in the nearest future which might see demand for oil rising by as much as 1 million barrels per day with attendant effect on crude oil prices

Traders have been assessing the likely impact of a tightening natural gas market on the broader energy complex over the coming winter.

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China’s data disappoints, as oil prices fall



China, the second-largest oil consumer globally, posted a slightly poor economic report which clouded the fuel demand outlook in the near term.

An earlier report by Caixin showed China’s manufacturing purchasing managers’ index (PMI) was 50.3 in July, lower than expected. On Saturday, manufacturing and nonmanufacturing PMIs came in at 50.4 and 53.3 respectively.

Business activity in the country has slowed due to higher raw material costs, equipment maintenance, recent floods, and the latest outbreak of COVID-19.

Asia’s biggest economy had been recovering at a rapid pace but if this recent slowdown deepens, the outlook will fall significantly. The outlook for crude demand is shaky, and that is unlikely to change until global vaccination rates improve.

Investors also looked forward to more oil production from the Organization of the Petroleum Exporting Countries and its allies (OPEC+).

Brent crude oil futures fell 1.05% at the time of writing this report and WTI crude oil futures fell 0.92%. According to reports, OPEC’s oil production rose to its highest level since April 2020 in July. Efforts to reduce production curbs will be further eased from August 1. Since then, Saudi Arabia has progressively ceased its voluntary supply cut.

There continues to be an increase in COVID-19 cases on a daily basis. A higher vaccination rate could however prevent the need for restrictive measures that caused fuel demand to plummet in 2020.

There will be no lockdown as the Delta variant of the virus fuels an outbreak of cases in mainly unvaccinated populations, but the situation is escalating, U.S. officials report.

The daily gasoline consumption of India, the third-biggest oil importer globally, exceeded pre-COVID-19 levels in July. While COVID-19 lockdowns were relaxed across the country, gas oil sales were low, indicating a sluggish industrial outlook.

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