FX.co ★ Crude oil and gold review

Crude oil

Oil prices dropped on Monday on the back of the predicted warming in the USA. More positive meteorological forecasts made oil futures to give back positions, won earlier during the session as a part of the growth to 15-months high.

In accordance with the trading results, February Light Sweet Crude oil futures plunged by 23 cents or by 0.3% to 82.52 USD per barrel. The futures reached the intraday high at the level of 83.95 USD per barrel.

Crude oil prices decreased after they had reached new 15-months high of almost 84 USD per barrel that was partly due to China positive data.

According to the preliminary reports of the Central Customs Administration of China, crude oil import rose to the highest level of 21.26 million metric tons that is equal to 5.03 million barrels per day.

This information strengthened opinions that China will be one of the driving forces of the oil consumption growth, although analysts mentioned that in the USA, the leading country on oil consumption in the world, oil demand will remain soft.

Stoppages of some US oil refineries because of cold weather also supported the oil prices. Nevertheless, economists noticed that when the capacity utilization is at historically low rates, free capacities can level any stoppages of oil refineries, so it is not a reason for worrying.

Fears concerning deliveries, appearing amid reports about the attack to Chevron Corp. pipeline near the Niger delta also sustained oil price growth in early deals. The main rebel group of the region, called The Movement for the Emancipation of the Niger Delta said that other rebels had attacked the pipeline, although it admitted that it had sanctioned this operation.

Gold

On Monday, gold futures closed with an advance, having hit 1-month high during the trading. The facts that investors continued to buy gold at the start of the year, the US dollar weakening and considerable data about the Chinese import conditioned the price growth. The affirmative China reports usually have a favorable effect on raw material demand and conduce to boost of investors’ risk appetite.

January gold futures quotations climb by 12.50 USD to 1150.70 USD per ounce, while February gold futures increased by 12.50 USD to 1151.40 USD.

Before the current session, gold futures reached the highest level after report release, according to which China export surged by 18% in December, while import gained by 56%.

Data on import shows that China is continuing to buy raw commodities a lot that support investors’ risk appetite. As a result, gold prices had risen before the main session beginning.

Moreover, reports on China helped to push down the American currency. Investors often buy gold as a tool of hedging from the dollar weakening, at that, the US dollar weakening cut the worth in other currencies of dollar-denominated raw commodities and, thus, can kindly redound upon demand.

Best regards,

analyst: Vladimir Donin.