Crude Oil
Crude Oil futures continued to rise in price on Wednesday because investors withdrew funds from US dollar and bought oil and other assets amid improving economic situation.
The October contract on sweet crude oil rose by 21 cent or 0,3 %, to 71,31$ per barrel at the NYMEX. Quotations of Brent oil futures increased by 41 cent or 0,6 %, to 69,83$ per barrel. This week investors prefer more risky, in comparison with the dollar, assets, thus crude oil is at the first lines of these assets list. From the beginning of week crude oil futures already ticked up by approximately 5 % in comparison with the last week when they traded below 70 dollars.
Crude oil futures help to hedge investments from the inflation caused by the dollar weakening; moreover the oil futures denominated in the American currency is cheaper to buy outside the USA.
The American economy growth can lead to the dollar strengthening in a long-term prospect. At the same time, some investors think that economy restoration will promote fast oil demand growth, which will allow the oil-refining enterprises to get rid of excessive energy reserves which were accumulated during last year.
But even in the conditions of economic restoration some time should pass before demand really will start to grow. According to the USA Energy Department forecasts, world oil consumption in 2009 will fall by 1,78 million barrels per day – to 83,76 million barrels per day. The IHS CERA consulting company predicts that world oil consumption will revert to the maximum of 2007 in three years.
On Wednesday the American Petroleum Institute informed that oil reserves decreased by 7,2 million barrels during the week between 29th August and 4th September, while gasoline and distillates stocks grew.
Gold
Quotations of gold futures slightly decreased on Wednesday as a result of profit fixing, but at the same time remained close to the psychologically important level of 1000 dollars, because the American currency continued to experience the downward pressure.
The December futures quotes on gold fell by 2,70 dollars to 997,10 dollars per ounce at COMEX.
On Tuesday the quotation of gold futures reached 1009,70 dollars, the highest rate since February, 20th. The rise in prices for precious metals was observed amid the euro strengthening which grew above 1,45 dollars for the first time since December of last year.
On Wednesday deals euro/dollar pair reached a maximum at a rate of 1,4602 that continued to support the gold market though the prices could not continue the growth observed on Tuesday.
Regards,
Analyst: Vladimir Donin
