Oil and gold: a review of the market situation

By | April 30, 2015

Crude oil futures reduce the rise
Crude oil future lost a part of American growth, as the US dollar strengthened following the release of upbeat US data on applications for unemployment benefits. The dollar rose as the number of initial claims for unemployment benefits for the week in the United States fell to its lowest level in 15 years. Such dynamics of the number of applications for unemployment benefits may indicate a more favorable than expected, the situation on the US labor market. Meanwhile, the results of April the price of oil could prove to be one of the most positive compared to other commodities, although prices are still more than 40% below the peak reached in June 2014.

Some analytics say that the recent rally was too premature, as the excess supply on the world oil market is preserved. According to the US Department of Energy, released on Wednesday, commercial stocks of crude oil last week rose 1.9 million barrels to 490.1 million barrels. Inventories increased less than expected, which indicates a reduction of excess supply in the country as the increased refining capacity utilization and slowing the growth of oil production. Oil reserves in Cushing terminal in Oklahoma dropped for the first 21 weeks, which is another positive signal for traders. “In North America, there is still a substantial excess supply of oil, but the volume of stocks seem to have stabilized at record levels, oil production reached a peak – said Norbert Rucker of Julius Baer. – Both of these trends are likely to persist”.

oil futures chart
Oil futures chart

Brent futures rose by more than 17% in April, as some investors bet on the fact that the bottom has been reached after nine months of decline. But prices have fallen about 43% since June, when futures rose to $ 116. Today, the spread between oil Brent and WTI of $ 7.12 per barrel compared with $ 7.26 at the close of the previous session.

The cost of June futures on US light crude oil WTI (Light Sweet Crude Oil) rose to 59.40 dollars a barrel on the New York Mercantile Exchange.June futures price for North Sea petroleum mix of mark Brent fell 6 cents, or 0.1%, to 54.78 dollars a barrel on the London Stock Exchange ICE Futures Europe.
Gold prices fell sharply

The price of gold fell below $ 1,200 after data showed that the number of applications for unemployment benefits in the US last week fell to the lowest since 2000, prompting optimism about the strength of the labor market. The number of initial applications for unemployment benefits fell by 34,000 to a seasonally adjusted, reaching 262,000 in the week ended April 25th. Economists had expected 300,000 new claims. At the same time data provided by the Ministry of Commerce, have shown that consumer spending rose moderately in March, recovering from weakness, marks the winter. However, a recent report suggests that Americans remain cautious, despite the cheap gasoline, and increased confidence.

According to the report, personal spending rose to a seasonally adjusted 0.4%, compared with an increase of 0.2% in February (revised from + 0.1%). Experts expect that the cost will increase by 0.3%. Adjusted for inflation, consumer spending rose in March by 0.3%. Meanwhile, the amount of personal income was unchanged last month after rising 0.4% in February. It is worth noting the March figure was the weakest since December 2013. It was predicted that revenues will increase by 0.2%.

gold chart
Gold chart

A separate report showed that the index of labor costs in the US, or the change in prices of the civilian labor force for businesses and governments grew 0.7% in the first quarter, higher than the expected increase of 0.6%. The upbeat data eased worries about the strength of the economy and increased speculation that the Federal Reserve can return to indication of possible timing rate increases in the United States. The Federal Reserve has kept interest rates at the current level, but has made little additional clarity in the terms of the first rate rise in nearly a decade.

As a result of the monthly political meetings ended on Wednesday, the Fed said that it will take into account labor market conditions, inflation pressure and forecasts for the global economy when deciding on the timing of rate increases. Central Bank refused the specific binding to the potential range of the calendar hike in a statement that provoked market uncertainty with respect to forecasts, the timing of rate changes in the future. The decision was made after data released on Wednesday showed that the US economy grew in the first quarter of this year, only 0.2%, slowing from 2.2% in the last quarter of 2014, which was the worst dynamics over the past year. The recent series of disappointing US economic data undermined optimism about the strength of recovery, prompting speculation that the Fed will take the first rise in rates at the end of the year instead of the middle. The cost of the June gold futures on the COMEX today fell to 1176.00 dollars per ounce.

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