On Wednesday, Brent (ICE) posted some minor gains. Apart from softer than expected minutes from the last Fed meeting (which came out in the evening), unexpected drop in US crude inventories supported the price. The EIA said US stockpiles of crude oil fell by 5.41 million barrels last week, mainly due to lower imports.
Today in early trading, Brent extends yesterday’s gains and the front-month contract is hovering at 116 USD per barrel (USD/bbl) at the time of writing.
Dovish signal sent by the minutes from the FOMC meeting has overshadowed decline in China’s PMI and bolsters prices of base metals on Thursday. LME copper is thus seen at the highest level in more than a month.
The China HSBC manufacturing PMI dropped further below the 50 mark (47.8 from 49.3), indicating a further cooling in activity in the country. This might, however, trigger further round of monetary easing, which somehow offsets a negative impact on commodity prices.
Gold experienced a relatively calm trading on Wednesday until the release of the minutes from the last FOMC meeting. The minutes were soft as the Fed indicated additional monetary stimulus would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of economic recovery. This keeps the door wide open for Fed action at the September meeting. Of course, the Fed has still to take its assessment on the recent eco data, but the signal was strong enough for markets to adjust positions for a higher probability of Fed more Fed stimulus. As a result, gold is trading above 1660 USD per troy ounce for the first time since the beginning of May.