Brent oil:

Brent oil fell by almost 1 percent as the data which came out yesterday reported that there is huge increase in the stock pileup. Adding to that, euro zone worries and slowdown in the United States economy made Brent oil to fall. This commodity was last trading at $108.7 per barrel.

Surprisingly, inventories of diesel and heating oil increased by more than 3 million barrels. John Kilduff, partner at Again Capital, says, “The report is solidly bearish and a welcomed development for consumers. The spike in gasoline inventories clears any of the remaining concerns about supplies from Hurricane Sandy.”

There are many events lined up this week. United States jobs data, unemployment figures and nonfarm payrolls data are expected to be out later this week.

Oil prices took some support after the meeting of United States President Barack Obama and the Republican House Speaker John Boehner. On anticipation of some good news, the United States markets moved up which helped the Brent Oil to take some support at lower levels. Barck Obama said that he will clear the deal once the republicans accept to impose higher tax on wealthy Americans.

Yesterday, euro zone retail sales dropped sharply by around 1.2 percent which clearly is an economic worry. Most analysts were expecting a drop of around 0.2 percent, but the actual figure was worse than the estimates. This is hurting economic growth and for that reason, Brent Oil. United States private sector hiring, too, was lower than expected.

Richard Langkemper, an analyst at Argos North Sea Group, said, \”It\’s a stalemate. There was some hopeful data from the U.S. last week and positive noise from China (this week), but Europe\’s a big worry.\”

The United States EIA said that the production of oil in the next 20 years would be higher than the present levels. The outlook for oil production is that it would touch 7.5 million barrels per day in 2019 and from there; a fall in the production is expected.

EIA said, \”The growth results largely from a significant increase in onshore crude oil production, particularly from shale and other tight formations. After about 2020, production begins declining gradually … as producers develop sweet spots first and then move to less productive or less profitable drilling areas.”

Gold:

Gold is trading near its one month low and a good support zone and is currently trading at $1688, down 0.3 percent from its previous close. Yuichi Ikemizu, branch manager for Standard Bank in Tokyo, says, \”Physical demand has picked up since prices fell. It is very easy to sell as prices seem unable to rebound above $1,700. Customers feel comfortable buying at this price level.\”

He also added, \”Improving physical demand means that we are probably getting closer to the bottom of gold prices for now.\” Physical buying is emerging in Gold and that is helping gold to remain at this support mark. The next support level is at $1670. Once that gets broken, gold will find itself difficult to recover in the near term.

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Category: Finances
Keywords: Fiscal cliff, Dow Jones, United States