Why has oil hit a four month low?

Published: 22 October, 2013 15:25

Oil prices have dominated many of the headlines in recent commodity trading news. On October 22nd, it had been seen that recent futures have closed near four-month lows.

This has much to do with rising crude supplies within the United States. While such an event was foreseen, recent non-farm payroll data seemed to slightly hint at a brief contraction in domestic industries throughout the country.

Thus, some analysts have curtailed their predictions for oil consumption in the winter months. Although there is indeed a higher amount of oil on the open market than there is demand, some online investors may view this as a time to purchase; assuming that consumption will increase in the northern hemisphere as winter approaches.

Another commodity trading sector that has remained particularly muted is in the areas of precious metals and in particular, gold. Many investors expected gold to rally in regards to highert German inflaionary figures, but the rather dismal United States economic data has served to hamper the bulls. This data not only shows that the economy is still weak, but that further debt wrangling could damage the image of the dollar. This is actually quite interesting, for such an instance should be a classic example of gold rallying off of soft fiscal data. On the contrary, gold seems to be following the markets more as a physical commodity as of late.

Thus, many online commodity trading circles still need to see evidence of a stronger global economy in order for gold to break its present slump. This may very well be the case should positive figures continue to emerge from Asia, but any such sentiment may be short-lived in relation to the quagmire of political brinksmanship expected to continue in the United States. Although gold may be an excellent long-term option, many investors are still quite careful to commit themselves to any concrete position.

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