Overview
Crude prices edged higher yesterday as a better than anticipated economic sentiment in Germany, Europe’s biggest economy discarded energy investors’ pessimism after Moody’s Investors Services slashed the credit rating for a number of euro zone members. Some extra support for oil prices was also provided by the escalation of geopolitical tensions with Israel accusing Iran of attacks on its diplomats abroad. Like usual on Wednesday, the release of weekly oil inventories is expected to offer near term direction for the energy complex.
Overview
News that Dow Jones reached a record high, last seen on May 2008 sparked a quick and sharp rally in crude prices as optimism over the US economy was seen to keep oil in high demand. A weakening US dollar on renewed hopes that Europe could solve its troubles also added support for the energy sector. Later today, the US Department of Energy will release its weekly inventories report, offering guidance regarding the possible short term direction and investors will be keen to see if this time the numbers will confirm the positive oil demand implied by the Nonfarm payrolls.
Gold Overview
Gold continued to retrace as uncertainty over Greek sovereign debt pushed investors into the safety of the US dollar. The yellow metal posted a sharp rally during January but the danger that at any moment something nasty could kick off requires caution so the odd profit taking is not really a surprise. Even if on the long term many investors expect gold to keep on rising, on the short to medium term things look different now with daily developments dictating the next immediate direction. Overall, gold lost $4.80 to $1720.10 and further drops towards the $1700.00 mark are definitely possible.
Overview
The euphoria over the positive impact the US employment report might have on the energy sector was short lived as yesterday the WTI contract declined again. The re-emergence of US crude oversupply seems to put downward pressure on WTI crude prices but at the same time, demand for Europe’s Brent contract is getting stronger thus widening the gap between the two to over $19.00. Not only that an embargo on Iranian oil led to concerns over crude supplies in Europe but now there are reports of heightened demand for Brent crude from Asia.
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