FX.co ★ Crude oil and Gold review

Crude Oil

Crude oil futures closed on the downside on Tuesday the fourth sequent day against falling of stock indexes and fears concerning the future demand for oil. The September contract on sweet crude oil decreased by 1,15$ or 1,6%, to 69,45$ per barrel at the New York Commodity Exchange . Quotations of Brent oil futures fell by 1,04$ or 1,4 %, to 72,46$ per barrel.

The oil prices changed in a tandem with stocks the most part of current year. The crude oil market traders consider stock indexes as the leading indicator of the economic activity level which in its turn defines demand for oil. On Tuesday Dow Jones Industrial Average index was in negative zone that has once again aggravated fears concerning weakness of demand for oil and growing reserves.

Current quarter world demand for crude oil decreased by 1,3 % in comparison with the same period of last year, as showed the monthly report of the US Energy Department. Crude oil reserves in the leading industrial countries increase and as of the end of July would cover 61 demand day whereas the average level for this indicator for five years is 54 days. In the USA growth of oil and oil products reserves is observed throughout five last quarters that is the longest period of growth for 30 years.

Investors also are waiting for oil reserves data of the Energy Information Administration at the U.S. Department of Energy that will be publicated on Wednesday. It is expected that oil reserves to grow by 700 000 barrels last week, petroleum reserves reduced by 1,3 million barrels, and distillates reserves including top residual oil and diesel fuel, decreased by 300 000 barrels.

In the meantime the OPEC has informed in its monthly report that oil production volumes in the countries, which are a part of cartel, grew in July the fourth month in succession. This growth, which is a signal of oil prices reduction, denotes the increasing volume of oil, that The OPEC member countries offer to the world market when world demand for oil decreases due to the end of summer season on which the demand peak in northern hemisphere is related.

Oil manufacture in the 11 OPEC member countries connected by the common quotas on oil production, on July grew by 105 000 barrels per day. It was stimulated by unexpected increase in oil manufacture in Saudi Arabia, the world\'s largest oil exporter.

Since April the OPEC countries have increased oil production approximately by 420 000 barrels per day in spite of the fact that the OPEC formally maintains essential restrictions on the oil manufacture, declared on the last year.

Gold

Futures on gold closed the auctions on Tuesday without significant changes in comparison with the Monday closing level so long as market participants avoided active actions in expectation of the USA FRS decision announcement concerning the monetary and credit policy.

The December contracts on gold rose by 70 cents to 947,60$ per ounce at COMEX.

It is expected that the trading session will pass very calmly and distant before the announcement of FRS meeting results, and there will be no aggressive trade. Besides, the market participants will watch over the US dollar reaction to FRS decision on interest rates.

Kind regards,

Analyst: Vladimir Donin