Overview
Crude prices followed closely the display in the EUR/USD yesterday being little changed at the end of the trading session with energy investors also discouraged by no significant differences in the stock market price. Nevertheless, oil prices did move higher in the morning after Iran said it could halt any exports to the European Union with immediate effect. In response, the International Energy Agency calmed the energy markets by saying that it does not see any disruption in supply as yet but if needed it stands ready to use emergency stocks.
Albeit reaching higher initially to $1.3184, the euro closed near flat yesterday as investors decided to take some profits and leave the attack on resistance at $1.32 for another day. It seems the latest rally in the single currency started because traders reversed anti-euro bets with a bonus when the Fed extended plans to keep the US interest rates at the current low levels for at least a year longer. It remains to be seen if the news from the other side of the Atlantic will be a real game changer or the ongoing uncertainty in the euro zone will again send the common currency lower.
Gold Overview
Gold moved above the $1700.00 level, reaching the highest point since Dec 12 ($1713.00) largely on the back of a statement from the Federal Reserve saying that interest rates are likely to stay near zero for longer than previously thought. The yellow metal does not pay interest so in an environment of low rates it is often bought as an alternative asset class and a store of value. A weakening US dollar also helped the rally. Fear of inflation further down the road once the global economy gets better was another supporting factor.
Overview
The weekly oil inventories report from the US Department of Energy showed a rather mixed bag with crude stockpiles rising higher than estimates and the gasoline inventories dropping compared with expectations of an increase. That kept crude prices around par until the Federal Reserve said the US interest rates are likely to stay low for longer (at least late 2014) in a bid to speed up the economic recovery. As a result, energy investors have pushed crude prices higher very quickly but the day finished with only a limited advance.
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