EconomyVN - At the close on New York Exchange, US light sweet crude oil for September delivery rose to $43.49.
World oil prices yesterday (11th of August) rose more than 4%, after Saudi Arabia's energy minister left open the possibility that this oil-producing country can implement moves to rebalance globally the "black gold" market.
At the close on New York Exchange, US light sweet crude for September delivery rose to $43.49. On London Exchange, Brent oil rose to $ 46.04.
Earlier, Energy Minister Khalid al-Falih of Saudi Arabia stated that during the meeting of the Organization of Petroleum Exporting Countries (OPEC) expected to take place in September, the country can negotiate "any appropriate actions".
The experts supposed that most likely the future move of Saudi Arabia can completely reverse the current data on crude oil output.
On Thursday, crude prices kept going down during early Asia trade, being weighed down by the ongoing growth in American oil stocks as well as the record-peak output by Saudi Arabia.
The combination of the two factors indicate that, notwithstanding the multiple supply disruptions as well as the steady dip observed in American production for recent months, the world’s still oversupplied.
In New York, September delivery light, sweet crude futures were worth $41.50 per barrel, down 0.5%. Meanwhile, October delivery Brent crude futures sagged 0.5%, trading at $43.83 per barrel.
Crude prices descended overnight after the Energy Information Administration data disclosed a 1.06 million-barrel growth in American crude inventories by August 5, thus pushing total stocks to 523.6 million barrels and also 37.7% above the five-year average for the same time of 2015.
The build actually reflects the soaring glut of refined products in the American market, that has led to lower margin and also reduced demand for oil.
Gold goes down in Asia
Gold tumbled during Asia trade as market participants booked profits and kept an eye open on the greenback’s weakness.
In New York, December delivery gold futures eased 0.06%, trading at $1,351.05 per troy ounce. September delivery silver futures ascended 0.15%, hitting $20.200 per troy ounce, while September delivery copper futures soared 0.23%, trading at $2.178 a pound.
Overnight, gold grew on Wednesday, as the greenback sagged steeply against a basket of its key counterparts, thus helping to provide a slight support to the most popular yellow metal in quiet, range-bound trade.
Market participants keep closely monitoring American employment data for a gauge on the strength of the labor market, following last Friday's upbeat jobs data for July. Additionally, on Wednesday, the US Department of Labor informed that in June, job openings soared by about 2% to 5.624 million from a relatively soft revised annualized rate of 5.514 million last month. Financial experts expected to see moderate surges on the month to 5.588 million.
New York Fed governor - William Dudley - said that the market should not eliminate the possibility that US Federal Reserve System (Fed) will raise interest rates this year.
In a press conference on 1sth August in Bali between Fed officials and financial managers, Mr. Dudley said that the market is too complacent as forecasting the Fed will raise interest rates by 25 basis points from today until the end of 2017.
Thanks to improved consumption, Mr. Dudley expects the US economy will grow at a rate of 2% in the next 18 months.
If the coming information reinforces economic outlook, US monetary policy will need faster moves than the price in the future to neutralize the market because the labor market tends to tighten and the inflation increases.
In addition, Mr. Dudley also noted that the market has underestimated the ability that no.1 economy grows faster than forecast.
The risks affecting growth such as the UK to leave the European Union (EU) and other international moves will soon ease. If the events, which have a negative impact, happen, Mr. Dudley said the US economy will require a faster growth rate than people expect.
Mr. Dudley supposed that this time is too early to exclude the possibility of tightening monetary policy further in 2016. It depends on the data, and no one can predict precisely.
In last week's policy meeting, the Federal Open Market Committee (FOMC) - who are directly responsible for the monetary policy of the Fed - have decided to keep interest rates unchanged at 0.25 to 0, 5% although they admitted the job market has been strengthened and other indicators also showed growth.
The last time, when Fed raised interest rates in December last year, is also the first time as they raised interest rates from nearly 0% for almost a decade.
On the other hand, in their statement, FOMC said inflation has not shown signs of growth yet and as the forecast, this situation will last. Chairman Janet Yellen and her colleagues noted that inflation will only increase as the energy prices retreat and the job market continues to grow.
Mr. Dudley said that the medium-term risks to the US economy tend to decrease in near future.
For that reason, he suggested that the market may believe that the Fed will likely stick plans to raise interest rates two times as their plan launched earlier.
According to the governor, Fed is adopting a risk management approach and they were prudent with the risks of tightening fiscal policy. Although the market supposes that Fed is cautious too early, but they decided to choose this method to not have to deal with the later discovered risks.
However, the Fed was slow to react to inflation risks. Inflation policies may be adjusted by increasing short-term interest rates quickly.
On Friday, crude prices remained around April minimums as slowing economic growth threatened to drastically worsen ongoing oversupply of oil as well as refined products.
International Brent crude oil futures were worth $42.78, showing a 8 cent surge from their previous close. Meanwhile, US West Texas Intermediate crude futures traded at $41.16, rising 2 cents.
Brent achieved its lowest value since April during last trading session, hitting $42.56, while WTI boasted another minimum of $40.95 per barrel on Friday. Currently, both crude benchmarks are down approximately 20% since their last high in June.
Due to ongoing oversupply, American bank Goldman Sachs told this week that it didn’t expect a huge recovery in prices any time soon.
Financial experts are still expecting that crude prices will stay within a $45 per barrel to $50 per barrel trading range in mid-2017.
Besides this, some experts told that recent price drops in oil had been heavily overdone, especially as demand is still strong notwithstanding worries over future economic growth.
Gold soars as BOJ notes downside risks to economy
Gold grew during Asia trade as Japan’s number one financial institution moved cautiously in its recent policy review, but indicated that it might act in the future if required.
In New York, December delivery gold futures edged up 0.45%, being worth $1,347.25 per troy ounce. As for September delivery silver futures, they gained 0.57%, trading at $20.307 per troy ounce. At the same time, September delivery copper futures sagged 0.45%, being worth $2.206 per pound.
Market participants were on the lookout for moderate easing measures. While Japan’s prime minister Shinzo Abe disclosed a broad ¥28 trillion stimulus measure on Wednesday, Reuters posted that the Japanese government might only offer as much as ¥7 trillion in direct fiscal stimulus.
Still if Abe appears to be unable to deliver on his promises of jump starting the national economy with a broad stimulus initiative, then the BOJ could feel extra pressure to lower interest rates more into negative territory.
Wall Street braces for a storm of news next week
Next week, the US stock market is going to be bombarded with news, thus giving market participants plenty to trade on, because earning kick into high gear as well as more than a dozen major banks are expected to hold their monetary policy gatherings.
The S&P 500 index surged 9.86 points to a new record close of 2,175.03. Then, for the week, the large-cap index edged up 0.6%. The Dow Jones Industrial Average earned up to 53.62 points to conclude at 18,570.85, adding approximately 0.3% for the week. Additionally, the Nasdaq Composite Index rose 26.26 points, closing at 5,100.16, thus finishing the week 1.4% higher.
The S&P 500 closed higher 2,135, a value where there had been a lot of resistance before, suggesting that the market has the breadth to push to 2,400, as chief technical strategist of BTIG, Katie Stockton, states.
As for the market’s upside momentum, it has been partly driven by better-than-anticipated earnings.
Gold struggles close to 3-week minimum with Fed in focus
On Monday, gold prices extended its losses from the previous trading session in Europe, holding close to a three-week minimum as the American dollar hovered at a more than four-month peak amid renewed hopes for a Fed rate lift later in 2016.
In New York, August delivery gold futures dipped to a session minimum of $1,313.10 per troy ounce, just above a three-week minimum of $1,310.70.
On Friday, prices dipped 0.57%, as renewed hopes for a Fed rate lift later this year backed the greenback and traders looked to buy into soaring equity markets rather than buying safe-haven assets.
The previous week the number one precious metal dropped 0.26%, the second weekly sink in a row.
A recent string of better than expected American data reignited rumors that the Fed is about to lift interest rates before the end of 2016. Currently, interest rate futures are pricing in a 45% chance of a rate lift by December, compared with less than 20% last week and up from 9% at the beginning of this month.
On Monday, crude prices reversed their early revenues and eased a bit during Asia trade, with the normal weekly data sets in the USA on stockpiles ahead and market participants looking for any demand cues from the Def as well as Bank of Japan this week amid a struggling global economy.
In New York, crude oil for September delivery slumped 0.11%, hitting $44.14 per barrel. Meanwhile, in London, September delivery Brent crude futures dropped 0.11%, being worth $46.06 per barrel.
The previous week, crude futures concluded Friday’s trading session at the lowest value for almost three months, as worries over global oversupply intensified after data showed that the American oil rig count surged for the fourth week in a row the previous week.
Baker Hughes, oilfield services provider informed late Friday that the previous week the overall number of rigs drilling for oil in America soared by 14 to 371, the fourth straight weekly soar and the seventh rise for eight weeks.
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