On Tuesday, the front month contract on Brent gained more than 2 percent which was the largest daily increase in price since the beginning of March this year. Ongoing strike of Norwegian oil workers is being cited as the probable reason. Market conditions, nevertheless, remain rather easy.
Today, despite the release of figures on US durables and EIA’s Weekly petroleum status report, the market will probably focus on rumors regarding the upcoming EU summit. We have the impression that the market is more or less taking into account that this summit will not deliver many detailed measures to implement a broad-based sharing of debt liability at a European level. At best some kind of a roadmap will be set out. If this is correct, market expectations for this summit aren’t that high. To sum up, we expect that the price of oil might stay rather calm at about 91-92 USD per barrel in the rest of this week.
Gold extends previous losses ahead of the EU summit and thus falls further below 1600 USD/toz, i.e. the level which used to be attractive for Asian buyers.
Nowadays, however, weaker Asian currencies (especially the Indian rupee) weigh on the local demand. Recall that India is the world’s top gold consumer and that the price of the yellow metal in terms of the rupee is seen close to an all-time high which was hit in November 2011. Moreover, let us remind that Indian government raised import duties on gold back in March this year. Reuters also cited some sources who said that EU crisis has also weighed on Asian demand.