Crude oil prices were under pressure after Mario Draghi magic seemed too eased off. Oh, sure, after Mario Draghi said he was disappointed with growth and the lack of inflation, oil got a bounce. Yet, when Asian and European stocks gave up the gains, oil prices falter until a headline came out about those Chinese Military ships that are moving off of the coast of Alaska.
Many oil companies had trimmed their budgets heading into 2015 to deal with lower oil prices. But the rebound in April and May to $60 per barrel from the mid-$40s suggested that the severe drop was merely temporary.
The Federal Reserve takes out its reference to "stabilizing oil prices" and the Saudi's are dropping hints of an oil production cut. This comes as U.S. oil production sputters and inventories falls. We may have just hit a bottom as crude oil companies quickly react and probably overreact regarding July's oil price crash.
Spot gold dealings opened with minor losses this morning, shedding $2.20 to start with a bid-side quote of $1,615.00 per ounce. Participants appear unwilling to give up much if any of the fear premium so long as the debt ceiling free-for-all rolls on.
Averaging $96 so far this summer, crude oil certainly doesn't feel cheap. Nevertheless, its technicals are looking increasingly bullish. After recently bouncing out of a major correction, oil appears to be embarking on a new bull-market upleg
The game changer is that the move reflects a new interventionist, activist approach by governments towards the commodity markets in general and energy specifically. Traders may bet against the national interest, but now do so at their peril.
Metals markets opened with a tad of weakness manifest in gold and lingering strength in the other components of the complex this morning. Spot gold traded near the $1,525.00 area showing and silver opened at $37.18 mark per ounce.
The sharp decline in oil, along with an initial 0.61% gain in the US dollar on the trade-weighted index made for a wobbly start in the precious metals' complex. Gold spot prices opened with a loss of $12.60 per ounce and silver with an 87-cent drop.
How the Fed's cheap money has got (and will continue to get) into the costs of foodstuffs remains unclear. But that it has pumped up the cost of getting by worldwide is clear, we fear. Call it speculation, hedging, hoarding or profiteering if you like.