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Economics Gazette

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December 10, 2019

Crude oil starts the new week with decrease

Crude oilThe crude oil starts the new week with decrease against a backdrop of rising dollar and rising US stocks. During Asian trade, the futures on US light crude oil with delivery in March fell by 0.78% to 64.94 USD per barrel. The decrease in Brent varieties with delivery in April was 0.82% to 68.02 USD per barrel.

The dollar picked up at the end of last week after it became clear that US wages grew at the fastest pace in eight and a half years. Data feeds inflationary expectations and makes traders believe that the rise in key interest rates in March is almost certain.

During the Asian session, the dollar index, which measures the performance of US dollar against a basket of six major currencies, reached 89.38 points, touching its highest Friday. Later, however, slightly decreased to 89.20 points.

Pressure on oil prices is now reflected by the increased oil production in the United States, which for the first time since 1970 has passed the 10 million barrel per day. This undermines the efforts of the Organization of Petroleum Exporting Countries to reduce supply to support prices.

The strengthening of the dollar logically affects the gold. Futures on precious metal with delivery in April depreciated by 0.17% to 1,335 USD per ounce. The gold with immediate delivery reported a 0.12% drop to 1,331.84 USD per ounce.

On the other hand, the demand for physical gold has improved at the beginning of this week, as jewelry makers in India have resumed their orders thanks to the preservation of the import tax on precious metal. On this background, the demand in other Asian countries remains rather weak.

In commodity markets Monday wheat rose to 1.23%, while cocoa rose by more than 2%.

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