Oil slides, Gold lower on dollar strength

Oil prices rose on Wednesday, recouping some overnight losses from a stronger dollar and supply fears. With a sluggish restart of production in the United States Gulf of Mexico, refining activities support.

WTI crude futures in the United States climbed 43 cents, or 0.6 percent, to $68.78 a barrel at 0643 GMT. This was after falling 1.4 percent on Tuesday following the Labor Day vacation. Brent crude futures rose 34 cents, or 0.5 percent, to $72.03 a barrel after sliding 0.7 percent the day before.

The market is assessing the implications of further delays in resuming operations in the Gulf of Mexico,” ANZ Research analysts wrote in a note.

Producers in the Gulf are still fighting to get back up and running nine days after Hurricane Ida ripped across the region with strong winds and copious rain.

On Tuesday, around 79 percent of U.S. Gulf output remained offline, with 79 production platforms still empty. Offshore wells in the Gulf account for approximately 17% of U.S. output.

Traders and analysts

Refinery operations look to be recovering more quickly, ING analysts wrote in a note.

According to the latest situation report from the Department of Energy, just around 1 million barrels per day of capacity temporarily halted, down from a peak of more than 2 million bpd. However, those refineries that have restarted are unlikely to be working at total capacity at this time,” the note continued.

Traders will be awaiting inventory data from the American Petroleum Institute industry organization. It expects the U.S. Energy Information Administration to arrive on Thursday to comprehend better the storm’s impact on oil production and refinery output on Wednesday.

Analysts surveyed by Reuters predict crude stocks to fall by 3.8 million barrels in the week ending September 3. Furthermore, they anticipate gasoline stocks to fall by 3.6 million barrels, and distillates to fall by 3 million barrels.

Oil prices dipped on Tuesday in a general commodity selloff as the U.S. currency rose on concerns that growing COVID-19 cases in the U.S. and Asia could hinder GDP.

Gold

Gold prices fell as Treasury yields rose on concerns that a slower recovery would allow the Fed to tolerate more significant inflation in the short run. Wall Street is slightly more anxious about inflation, and with Fed tapering probably in December, the curve will steepen, which should be bearish for gold in the short run.

Gold is vulnerable here and might fall to $1,755, and if that level quickly broke, a final drive down could see prices approach $1700. Once the market can see beyond the next few months of pricing pressures, the reality of global disinflation forces will likely put an abrupt end to the rise in Treasury yields. It is prompting many investors to resume gold purchases.

Aluminum

Aluminum prices have risen as a coup in Guinea threatens the market’s supply outlook. The imbalances continue to worsen, which might lead to Aluminum breaking through its decade highs. Guinea, a West African country, holds important sources of bauxite and iron ore. Geopolitical risks remain elevated, and even if the currency strengthens, price gains for the commodities impacted may continue.