Oil prices fell for two days to Friday. This situation occurred because oil was pressured by a surprise increase in US stocks. Unfortunately, the coronavirus pandemic has decreased the demand for fuel. Brent crude was down 18 cents, or 0.5%, at $ 39.88 a barrel.
It was happened after falling nearly 2% on Thursday. On the other hand, US crude fell 14 cents, or 0.4%, to $ 37.16 a barrel. It means that the commodity has decreased by 2% in the previous session. The abundant stock can be one of the causes.
Both major benchmarks are down around 6.5% for the week and are headed for their second week of decline. It can be argued that hopes are dimming for a steady recovery in fuel demand amid signs of a second wave of the coronavirus outbreak.
Stocks in America Rise beyond Expectations
In the United States, stocks of the oil commodity rose last week. This increase exceeded expectations, as refineries slowly returned to operations after production sites were closed due to hurricanes in the Gulf of Mexico and disasters affecting the wider area.
While US crude production continues to recover after the Laura Hurricane, the figures show that refineries have further lowered operating rates over the past week. It is what ING Economics said in a note. US crude inventories rose 2.0 million barrels.
That was compared with the 1.3 million barrel drop forecast in a Reuter’s poll. Onshore storage remains close to capacity as supply continues to exceed demand. This is what then makes floating storage popular again because of the low cost of financing.
Steps to be Taken by OPEC
The stock-raising is likely to be the subject of a meeting on Sept. 17 on the monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia. The Group is an organization known as OPEC+.
This grouping has been holding back supply to reduce inventory as many investors and traders may have expected. However, analysts said the meeting will likely focus on compliance among members, rather than looking for deeper cuts. No wonder then many eyes will be on there.
It is hoped that OPEC+ and its meetings will produce the best decisions. It is because oil prices had risen some time ago. If the oil is weakened because of its abundant stocks, the different thing has happened to another commodity. In this case is gold.
The safe-haven metal has risen more than 29% this year on the back of an unmatched stimulus. The interest rates given are close to zero from global central banks. Investors are now turning their attention to the US Federal Reserve's policy meeting on September 15-16.
Gold Prices Precisely Rise
On the other hand, gold jumped 1%, as the dollar weakened after the European Central Bank maintained its policy. It was also as US jobless claims held high levels, dimming hopes of a speedy economic recovery from the effects of the coronavirus pandemic.
Spot gold rose 0.7% to $ 1,959.93 an ounce, after hitting the highest level since Sept. 2 at $ 1,965.93. US gold futures were up 0.7% to $ 1,967.80. The ECB is not really changing its policies. This is what causes the dollar to weaken and this is actually positive for the price of gold.
The dollar fell as much as 0.3% and made gold cheaper for holders of other currencies. This situation also occurred because the euro rose after ECB President Christine Lagarde said she would continue to closely watch the exchange rate. It is not a monetary policy tool.
Meanwhile, the US weekly jobless claims were at a high last week. This suggests the labor market's recovery from the pandemic has stalled. Many say the recovery is not happening as quickly as desired. What's more, there are now concerns about a second wave of the virus.
