FX.co ★ Futures market review

Crude oil

On Tuesday, the crude oil futures rose again touching the highest level for 2 weeks. A positive point for oil was the speech of FRS Head Ben Bernanke in the U.S. Congress, which gave rise to hopes for the economic recovery and also led to the dollar\'s rally, restraining the oil prices increase. According to Bernanke, the economy demonstrates «potential stabilization signs», and FRS will carry out the proper monetary policy. The inflation will remain low, as it is expected.
The August crude oil contract rose by 74 cents or by 1,2% to 64,72 USD/brl at the New York Mercantile Exchange (NYMEX), the highest level from the beginning of July. During the day prices reached the mark of 65,53 USD, but later fell to the day\'s low of 63,38 USD. The September contract also ticked up by 0,5% to 65,61 USD/brl.
Investors are buying with hope that demand on oil and goods will increase. The oil prices have been rising for the 5th session after a sharp lowering at the month beginning. The crude oil market is moving mostly due to the fianacial markets sentiment, so further growth is still possible. Nevertheless, the fundamental data doesn\'t gladden us and there is still some uncertainty regarding the demand growth perspectives.
The supply factors do not stimulate the oil prices upturn, as the oil production in the countries, which are out of OPEC seem to improve, and the production volume at the oil-refining plants within the OPEC countries remains rather high. Taking into account that energy companies shares are getting on at strong levels, and very possible that at the end of the year the oil output in the OPEC counties will continue to contract.
These factors have already affected the crude oil prices: the price dropped by 25% from this year highs. This signals not only about overheat in the market, but also about high price rate imbalance, taking into account the current demand and supply condition.

Gold

Gold futures were trading on the downside on Tuesday, amid the speech of the FRS Head in the Congress, who announced that inflation rate will remain historically low. Aside from this, Bernanke hinted that the market nips on ahead, as it overevaluates the economic indicators, that resulted to the U.S. dollar rally. Due to the correlation of the last one, gold prices ticked down.
August gold contract lowered by 1,90USD or by 0,2% to 946,90USD/ounce at COMEX.
It is known that investors are buying gold as a hedging from inflation and weak currencies. Presently, the participants don\'t want to close profitable deals, but at the same time there are not so many purchases of yellow metal that was witnessed during the previous sessions, where the main driving force were the oil price upturn and dollar\'s decrease.

Kind regards,

Analyst: Vladimir Donin