Yesterday, Brent crude virtually erased gains posted on the day before and closed above 112 USD per barrel (USD/bbl) level. Apart from the weakening dollar, the oil price might have been supported by tensions at the Syrian-Turkish border. Regarding the forward curve, it has steepened further as a slower than expected return from maintenance continues to strangle North Sea oil production.
Today, markets might keep a wait-and-see mode ahead of the US payrolls. We are not overly optimistic on the result. If this was indeed the case, the price of oil could unwind a part of yesterday’s gains. Of course, this might be overshadowed by further escalation of the tensions between Turkey and Syria. Although the production of oil in Syria currently stands at about 150 thousand barrels per day (before the outbreak of civil war, it was cca 500 tbpd) and further decline is not material from the perspective of global supply/demand balance, prospective escalation of the tensions might further undermine the stability in the oil-rich Middle East region.
Today in early trading, gold extends yesterday’s gains and hits 11 months high ahead of the US payrolls report. Recent decisions of central banks to ease policy have supported retail investors’ demand for the metal – major ETFs’ holdings of the yellow metal are seen close to the all-time high. At the time of writing, gold is hovering at 1790 USD per troy ounce.