Commodity Index: Oil Up $51 after Sharp Slide
COMMODITY INDEX – On Wednesday, oil inched up to $51 a barrel. This followed after it hit its lowest as of June last year. Further, this was amid the perceptions that a price slide was provoked by factors. These factors include worries over the news that the global economy had been overdone amid an OPEC-led effort to tighten supply.
Crude has been in the middle of a broad financial weakness amid the US government shutdown. Moreover, the increasing US interest rates and US-China trade dispute made investors anxious and intensified the global growth concerns.
As of 0949 GMT, the global benchmark Brent crude rose 43 cents at $50.90. Further, it dropped to $49.93. This was its lowest hit since July of last year and recorded a 6.2% decline in the last settlement.
Meanwhile, the US crude rose 74 cents at $43.27.
“I think there is a little bit of over-extension to the downside linked to global market fears. It’s all about equities. OPEC has shown it wants a higher price and is working towards that goal,” said Petromatrix Analyst Olivier Jakob.
During the Christmas holidays, trade was thin. Asian markets on Wednesday retreated again. Moreover, markets in Britain, Germany, and France will stay closed on Wednesday.
The outlook is not similarly weak when there was a glut build up in 2016 amid the weigh on economic worries. This is because the Organization of the Petroleum Exporting Countries is currently attempting to prop up the market, Jakob said.
Meanwhile, OPEC has expressed concerns about the possible formation of a new glut.
Commodity Index: Gold rises 1% on US government shutdown
The partial shutdown of the US government along with escalating concerns of a global recession is taking the gold slowly. However, the gold is pacing toward its $1,300 per ounce level.
Further, Comex gold futures traded higher at $13.70, or almost 1%, at $1,271.80 a troy ounce. This was gold’s sixth higher close in seven sessions.
Dated back in June, the precious metal reached a six-month high of $1,273.90.
During the Christmas Eve, risk aversion was widespread across markets. This has boosted the standing of gold as a safe-haven.
The Dow dropped nearly 3% while there was 2.64% loss in the S&P 500. The Wall Street is nearing toward a bear market territory on concerns regarding the questions of Treasury Secretary Steve Mnuchin on bank liquidity.
Elsewhere, oil prices dropped closely 7%, placing the 10-week rout in US crude to 45%.