Oil steady as tropical storms hammer US Gulf Coast
Oil prices are a little flat on Tuesday but crude continues to trade near the upper end of its recent range. With the Gulf coast being hit with two tropical storms this week, it may come as a surprise that oil prices haven’t jumped a little more as they would have in the past but the situation is very different now. Marco’s downgrade may be a factor but with Laura potentially being upgraded, we may have historically seen a bigger impact.
The difference this time is that we are in the midst of a pandemic, one that has played havoc with the oil industry and forced huge production cuts as inventories have swelled. This is not a balanced market or one running a deficit, there is ample supply so any shortfall here is unlikely to cause any problems. The result is muted trading in oil as attention remains on the far more important factors, like a vaccine.
Gold flat after Monday’s reversal
Gold is a little flat on the day after giving up early gains on Monday to end the session in the red. The continued fightback in the dollar amid higher yields ruined the momentum for gold last week, just as it was making a comeback. A little reversal yesterday once again sucked the life out of the yellow metal and left it trading around USD1930, still lofty levels historically but some way of the highs earlier this month.
The dollar has retraced around two-thirds of the losses it sustained a couple of weeks ago as it plunged below key support, which could make the coming days really interesting for the greenback, and in turn gold. Should the dollar now turn lower, it may suggest last week’s rally was nothing more than a corrective move in a broader downturn and give gold renewed momentum. On the flip side, a break above 94 in the dollar index could spell trouble for the yellow metal.
