FX.co ★ Crude oil and Gold review

Crude Oil

Crude oil futures closed the trading session on Monday on the downside due to the US dollar strengthening against the Euro and falling of stock quotes. The September contract on sweet crude oil fell by 33 cents or 0,5%, to 70,60$ per barrel at the New York Commodity Exchange. Crude oil futures decreased by 9 cents or 0,1 %, to 73,50$ per barrel.

On Monday the US dollar increased to a week maximum against euro. Proceeding strengthening of the US dollar eased the rising motion in the crude oil market as dollar growth makes crude oil more expensive for holders of other currencies.

From July 13 the crude oil futures have grown almost by 20 % on expectations that economic recover will activate crude oil demand. The positive data indicating the unexpected decrease of the USA unemployment rate to 9,4 % on July, pushed the crude oil prices close to 73 dollars per barrel on Friday, however dollar restoration limited the further growth.

The situation on the crude oil market can be characterized as struggle between two contradictory parties one of which are superfluous crude oil resources, and the second one is a hope for economy recover.

In the meantime, extent of quotas on OPEC oil production observance decreases. As it became known from last Dow Jones survey, quotas are observed on 73 % against 76 % on June so long as manufacturers aspire to take advantage of prices upturn.

Gold

Futures on gold decreased on Monday due to the sales based on technical factors, and the US dollar strengthening. The December contract on gold fell by 12,60$ to 946,90$ per ounce at COMEX.

Though, gold is supported around 930$, downside figure is formed on the chart, which, probably, signifies the further decline of price on yellow metal. Besides, they say, that chances of gold to reach 1000$ level this year, decreased.

Slight strengthening of dollar and events in the Republic of South Africa became other reason of gold prices reduction. The South African energy company Eskom has suggested to raise employees’ wages by 10,5 % on Friday. Earlier trade unions rejected the company offer to raise wages by 8 %. The National Union of Mineworkers of the South Africa Republic requires increase by 14 %. As the Press Secretary of the organization has informed on Monday, the union will conduct voting by last Eskom proposal on Tuesday and may continue strike if this offer is rejected.

Kind regards,

Analyst: Vladimir Donin.