Why is the oil price up and down?

Published: 10 April, 2013 13:21

Commodities and North KoreaIn the latest roundup of commodity trading news, oil and gold have once again attracted the attention of many traditional and online traders. One newsworthy story is the rebounding of global oil prices after last week’s sharp knee-jerk reaction over the release of rather poor United States employment data.

Despite the fact that crude futures dropped sharply last Wednesday and Thursday, we have seen many investors buy on the dip and therefore prices have become more buoyant during the first half of this week. Whether this upward momentum continues is uncertain, for one of the factors affecting the weaker prices previously seen is the fact that a strong supply of crude in the States has helped push prices downward.

The question remains as to whether increased confidence in the global economy will serve to offset lower prices per barrel. Many online commodities traders may still see this position as an opportunity for a medium-term hold if they assume the rise will continue.

Gold resistance by end of 2013?

On the precious metals front, gold has taken another slight hit resulting from the strengthening of the dollar. Many commodities traders are questioning whether gold will reach the anticipated resistance of $2,000 by the end of this year, as some had previously predicted. Gold futures were further diminished by a strengthening in the American equity markets.

As both the S&P an the Dow have seen substantial gains in recent weeks, may believe that gold prices will continue to be weighed upon. However, this retreat was slightly muted when combined with the relatively poor employment data released from the United States last week. This fueled speculation that the Federal Reserve would keep their loose financial policies in place for a protracted period of time.

Effect on commodities due to uncertainties in North Korea?

Nonetheless, the destabilising geopolitical situation in North Korea may see some safe haven investors enter back into the precious metal should conditions profoundly worsen.

Related news topics

Leave a Reply