Commodities: Gold and oil prices on July 26
Oil and gold prices increased on Friday. There are several reasons which influenced the prices, such as regional tensions and possible interest cut by two major central banks. Also, the trade war between the U.S. and China is a serious problem. In this situation, commodities such as gold and oil play an important role as their prices depend on the global economy. Another event in the oil industry was that representatives from the National Oil Corporation of Libya traveled to China.
Oil industry on Friday
As mentioned above, oil prices rose on Friday. The price of Brent oil increased by 23 and reached $63.62 per barrel. Another benchmark, which is the West Texas Intermediate (WTI) also increased by 25 cents to $56.27 a barrel. The weekly gain of Brent crude oil is 1.8%. During the last week, the price of Brent oil reduced by 6%. The price of WTI crude oil rose by 1.1% whereas during the previous week WTI oil price fell by 7.5%.
The regional tension in the Middle East is far from being over as neither U.S. nor Iran is ready to solve this problem. Iran seized British tanker several days ago as a retaliatory measure. Such incidents increase the chances of military confrontation. Even though the U.S. is the biggest oil producer in the world, conflicts in the Strait of Hormuz still affect oil prices. It is worth mentioning that tankers with nearly 20 million barrels of oil cross this strait every day.
U.S. authorities asked several partners including Japan, Germany, South Korea, and others to work together in the region. The goal of this maritime initiative is to ensure that navy ships will protect the vessels in the area.
Another reason which helped the oil prices is that crude oil stocks fell in the U.S. Also, the oil production in the Gulf of Mexico is still limited after Hurricane Barry.
The Libyan oil industry
According to the OPEC, Libya has 50 billion barrels of proven oil reserves. However, the civil war which started in 2011 is a huge problem for the local oil industry. Libyan representative form the National Oil Organization traveled to China to meet with the Chinese companies. The aim of this visit is to persuade Chinese companies to start buying Libyan oil. Unfortunately, security risks remain high, and it is hard to predict whether Chinese companies will enter the Libyan oil industry.
Gold price update
The price of another commodity, which is gold, is also on the rise. Spot gold rose by 0.4$ to $1,419 per ounce as of 07:43 GMT. It is good news for this precious metal during the previous session price of gold fell to the lowest point this week. The U.S. gold futures increased by 0.3% to $1,418.
In several days the policymakers will meet to discuss the monetary policies. There is a chance that the Federal Reserve will decide to lower the interest rate. This will have a significant impact on gold prices and the U.S. economy in general.
Gold and oil prices are on the rise. However, problems such as regional tensions, trade war fed meeting will influence the prices for the upcoming days.
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