Commodities
Crude oil prices record gains after tropical storm hit Gulf of Mexico
Tropical Storm Sally picked up its strength in the Gulf of Mexico, west of Florida yesterday.
Crude oil prices began the first trading session of the week on a bullish note. The feat was triggered after a tropical storm in the Gulf of Mexico compelled major U.S oil producers to shut down their oil rigs, but the upsurge in crude oil prices were capped by growing concerns about the falling demand for gasoline.
At the time of this report, U.S. West Texas Intermediate gained 0.51%, to trade at $37.52 per barrel, and Brent crude prices were up 0.25% to trade at $39.93 per barrel.
Both crude oil contracts ended lower in the previous week, its second consecutive week of decline.
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Yesterday, Tropical storm Sally, picked up its strength in the Gulf of Mexico, west of Florida, and was turning to become a category 2 hurricane. The hurricane storm is disrupting oil supplies for the second time in less than four weeks, after hurricane Storm Laura swept through the Gulf coast.
What it means: Usually, crude oil prices surge higher when oil supplies are shut down, however, with the global exponential growth in COVID-19 caseloads, and oil demand falling momentarily, oil traders remain relatively cautious.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, gave insights into the fundamentals, keenly monitored by oil traders.
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“Oil traders are back on hurricane watch, but it is all shoulders and heels while dancing to the tune of broader markets, amid more gloom on the supply-side,”
“Some Gulf of Mexico oil producers, on Saturday, idled production bracing for another hurricane brewing off Florida. But so far, the hurricane impact is getting offset by yet another gloomy short-term view that is likely limiting OPEC’s attempt to stabilize markets,”
READ: Oil prices rally higher, as U.S oil producers suspend operations in Gulf of Mexico
“Reports that Libyan commander, Khalifa Haftar gave his ‘personal commitment’ to reopen the energy sectors, could bring more barrels back to the market at the most unwelcome time of the year,”
“Unquestionably, this could put OPEC+ in an even more giant pickle, when they hold a virtual meeting on Thursday to review the current production intervention level’s price impacts.”
Commodities
Crude oil prices fall on fears of global energy demand
In Thursday’s trading session, Crude oil prices fell
Crude oil prices dropped at Thursday’s trading session. This slide is attributed to recent poor E.U. economic data, and a lower-than-expected U.S. gasoline demand. Fears of a second wave of COVID-19 in emerged economies also weakened investors’ enthusiasm.
What we know: Brent oil futures fell 0.57% to $41.53 by (6:40 AM GMT) and WTI futures slid 0.78% to $39.62.
The E.U. released purchasing manager index data that heightened fears about the region’s economic recovery hopes, with the services index dropping by 50-mark, separating growth from contraction.
READ: Crude oil prices record gains after tropical storm hit Gulf of Mexico
The U.S. Energy Information Administration (EIA) released figures on Wednesday showing a lower-than-expected draw of 1.639 million barrels for the week to Sep. 18, against a forecast 2.325 million-barrel draw. U.S. demand for gasoline was down 9% at this time last year.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in an explanatory note to Nairametrics, gave detailed insights on the bearish run prevailing in the oil market.
“Crude oil prices initially reversed their decline overnight after the Energy Information Administration reported that commercial oil stocks trended down due to a large draw in products with gasoline stocks back down to their 5-year average.
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“Yet it was all for naught after US Federal Reserve Chair Jay Powell pancaked global markets with a discordant economic warning and a penetrating call out for more stimulus to congress,” Innes stated.
Oil traders are bringing crude oil price recovery to a screeching halt with nervous investors seeking out the US dollar’s safety.
Commodities
Gold prices bow to rising dollar, trades below $1,900/ounce
Gold futures was down 0.89% to trade at $1,890.60 an ounce on Wednesday’s trading session.
Gold prices remained under intense pressure at the Wednesday trading session, as it went below $1,900/ounce. The slide is attributed to the rise of the U.S dollar, firing up on all cylinders on the macro that fresh COVID-19 lockdowns will be implemented in London and other parts of Europe.
What we know: At the time this report was drafted, gold futures was down 0.89% to trade at $1,890.60 an ounce.
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Why the yellow metal is falling now
Rising COVID-19 caseloads in emerged markets have distorted investment strategies of global investors as the world’s economic recovery seems to be fragile, driving investors into dollars, which has weighed on the bullion-asset.
On top of that, gold traders also have unwound some of their gold holdings as a part of this week’s equity-market sell-offs, which added to the pressures around precious metals.
READ: Gold rockets above $1850 as it continues 9-year high
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note, spoke on the selling pressure that the yellow metal is presently facing, as it seems the bears are having the upper hand.
“Gold has fallen out of favor; still, the downside may also be limited due to low yields and geopolitical and trade risks that are likely to provide a price floor.
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“The lack of a bounce after Monday’s drop is not encouraging. While gold does not look persuasive, there is a limit to how low it is likely to fall – at least ahead of a highly contentious US election, a climate of highly charged geopolitical risks, and renewed COVID-19 concerns.
“The precious metal might continue to struggle to make new highs.”
Commodities
Crude oil prices drop again after losing 4% on Monday
Oil benchmarks fell around 4% on Monday following rising concerns of increased coronavirus cases.
Crude oil prices drifted lower at the later part of Asia’s trading session on Tuesday, as Tropical Storm Beta in the Gulf of Mexico weakened.
What we know: Brent oil futures were down by 0.31% to $41.31 at the time this report was drafted, and WTI futures fell by 0.23% to $39.22.
Both oil benchmarks fell around 4% on Monday, hit by rising concerns that an increase in coronavirus cases in major markets could spur fresh lockdowns and hurt demand.
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Oil prices are falling again amid Tropical Storm Beta reduced in power in the Gulf of Mexico, allaying fears of an extended shutdown that began in the previous week with Hurricane Sally.
In a note to Nairametrics, Stephen Innes, Chief Global Market Strategist at AxiCorp, spoke on the macros disrupting the price of hydrocarbon.
READ: Soybean Futures reach 2-year high, following U.S sales to China
“In line with broader markets, oil prices were hammered lower overnight as the growth assets buckled amid lockdown fears in Europe and the UK.
There continues to be concern around the effects on demand of the resurgence in Covid-19 cases globally as countries have to counterbalance the economic and health issues in getting back to work. The second half of 2020 was always going to reflect this price see-saw.
While mother nature is doing its part as traders focus on the hurricane season in the US, OPEC+ cuts seem to be tightening the market.”
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However, the COVID-19 crisis continues to deepen with growing concerns about global energy demand arising from the latest data on the spread of the virus in major world economies such as the U.K.
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