Oil boosts as demand outlook improves. Gold hits 1-week low
According to the latest news, oil sharply increased, extending three weeks of gains. Notably, gains were underpinned by an improved outlook for fuel demand as fast coronavirus vaccinations help lift travel curbs.
Brent crude oil boosted by 0.7%, which equals 51 cents, and traded at $73.20 a barrel, the highest since May 2019. Meanwhile, U.S. West Texas Intermediate (WTI) surged 0.7% or 47 cents. It traded at $71.38 a barrel, the level unseen since October 2018.
Motor vehicle traffic is recovering. Analysts say that It is returning to pre-COVID levels in North America and much of Europe. Moreover, people are again starting traveling due to easing of lockdowns and other restrictions.
Avtar Sandu, senior commodity manager at Phillip Futures in Singapore, announced that the oil market is expected to be volatile with frequent pullbacks in the short term. He explained that oil prices are beginning to struggle as demand in Europe and India faces headwinds.
However, Sandu adds that the major trend is still the same, and deep pullbacks would provide opportunities for buying the dips.
According to the International Energy Agency, OPEC+, an intergovernmental organization of 13 countries, and its allies, the group known as OPEC+, need to raise output in order to meet recovering demand.
As we know, the OPEC+ has been restraining production to support prices after the COVID-19 pandemic wiped out demand in 2020. The group was maintaining strong compliance with agreed targets in May.
Moreover, Goldman Sachs reported last week that it anticipated Brent to increase to $80 per barrel this summer. The bank announced that the rollout of vaccinations increases economic activity globally.
Additionally, Baker Hughes Co, energy services firm, reported that U.S. oil rigs in operation gained by six to 365, the highest level unseen since April 2020.
Gold fell to a 1-week low, weighed down by a stronger dollar
On Monday, the yellow metal declined by nearly 1% to its lowest in more than a week. Analysts say that gold was weighed down by a stronger dollar.
Spot gold fell by 0.9% at $1,860.44 per ounce, its lowest since June 4. Meanwhile. U.S. gold futures dipped by 0.9% and traded at $1,862.20.
The dollar traded close to a one-week high against its rivals, which is making the yellow metal more expensive for holders of other currencies.
Last week’s data showed a sharp increase in May U.S. consumer prices. However, Fed officials have repeatedly announced that inflation would be short-lived. Traders are waiting for Fed’s June 15-16 meeting to clarify policymakers’ views on increasing inflation and monetary policy going forward.
Among other precious metals, Silver declined by 0.4% and traded at $27.78 per ounce, while palladium fell 0.5% to $2,762.44. Additionally, platinum decreased by 0.4% to $1,142.84.
