Oil Futures Hit Two-Week Low; Gold Trades Higher Ahead of CPI Report – Comments from Century Financial

• Crude Oil

Oil prices finish lower after Hurricane Beryl leaves energy infrastructure largely unscathed: Oil futures lost ground Tuesday, with U.S. benchmark prices settling at their lowest in nearly two weeks after Hurricane Beryl appeared to leave Texas energy infrastructure with little damage.

U.S crude oil futures slipped in post-settlement trading Tuesday even as the American Petroleum Institute reported a larger-than-expected decline in domestic weekly crude stocks in a further sign that summer demand is on the rise.  

The American Petroleum Institute (API) reported another week-on-week decline in US Weekly Crude Oil Stock for the week ended July 5. According to the API, US weekly barrel counts fell by another 1.9 million, adding to the previous week’s sharp decline of 9.163 million and undershooting the forecast -250K barrel drawdown. Crude Oil prices remain tepid to soft on Tuesday as US Distillate Stocks, Crude Oil derivatives primarily used for diesel and home heating and cooling production bounced 2.3 million and entirely missing the forecast decline of -740K drawdown.

• Gulf Markets

The ADX General is falling 0.2% at 9,114.04 in Abu Dhabi in early trading. International Holding Co. PJSC contributed the most to the index decline, decreasing 0.6%. Ras Al Khaimah Poultry & Feeding Co. had the largest drop, falling 3.8%.
The DFM General Index opened slightly higher at 4,078.76 in Dubai. Air Arabia PJSC contributed the most to the index gain and had the largest move, increasing 1.2%.

The Tadawul All Share Index opened slightly higher at 11,789.38 in Riyadh. Al Rajhi Bank contributed the most to the index gain, increasing 0.3%. Al-Baha Development & Investment Co. had the largest increase, rising 8.3%.
Oil edged lower as concerns about Chinese demand and continued uncertainty over the timeline for Federal Reserve interest-rate cuts outweighed signs of another inventory draw in the US.

Brent fell toward $84 a barrel, dropping for a fourth session, while West Texas Intermediate neared $81. In China, the largest oil importer, data on Wednesday underscored the nation’s economic challenges, with deflationary pressures persisting as factory-gate prices fell. That followed a spate of earlier signals that suggest diminished appetite for crude from some of the nation’s refiners.

The American Petroleum Institute said crude stockpiles shrank by 1.92 million barrels last week, with a drawdown also logged at the key Cushing, Oklahoma, hub, according to people familiar with the figures. Total holdings sank more than 12 million barrels the prior week.

• Gold

Chairman Powell’s testimony on Tuesday acknowledged the recent modest progress in lowering inflation further. There was a subtle but notable shift in his statement that led market participants to believe that a pivot to rate cuts was looming around the corner. Powell remarked that the labour market has eased considerably across many measures – which is a positive sign considering an overheated labour market was the primary risk to lowering inflation. Recent data suggests a marked slowdown in hiring and three straight months of rising unemployment. Although Powell did not offer a timeline, his tone suggested it was a matter of “when” instead of “if” the Fed would slash rates this year. Markets see a good chance that the first rate cut could happen in September.

Gold is trading higher by 0.37% at $2,373 on Wednesday, ahead of Powell’s appearance before the House Financial Services Committee later today. It has support at $2,354 and $2,343 and could encounter super-trend resistance at $2,403. June’s CPI report will be published on Thursday, which could impact gold’s movement.

Gold prices in the UAE today are as follows:

24 Carat – AED 286.75
22 Carat – AED 265.50
21 Carat – AED 257.00
18 Carat – AED 220.25

• Cryptocurrency

Cryptocurrency markets traded higher for the second consecutive day on Wednesday on growing bets of imminent U.S. rate cuts. Cryptocurrencies have rallied on the back of growing expectations of a Fed easing cycle likely to commence in September, with Powell saying on Tuesday that the U.S. is “no longer an overheated economy”. However, he provided little clues on how soon those rate cuts could come.

Meanwhile, the closely watched U.S. inflation report is due on Thursday, where expectations are for core consumer prices to have held steady monthly in June. Bitcoin (BTC) was trading 3.1% higher at $59,082, while Ethereum surged 1% to $3,100. Meanwhile, the global cryptocurrency market cap also gained by 2.2% to around $2.16 trillion in the last 24 hours.

The crypto market showed initial signs of recovery as the market begins to digest the impact of the German government’s large BTC release. With Mt. Gox fears still looming over the market, we can expect the markets to remain choppy in the coming weeks. If Bitcoin breaches the $60,000 mark and stays above it for at least 2 weeks, then we can expect the momentum to sustain.

BTC is currently moving slowly, and tomorrow’s U.S. CPI data could provide clear direction and increased volatility. Key Support levels for BTC is at $53,500 and $50,700 while Resistance is at $60,000 and $63,000.

Last Updated on 7 months by News Desk 2