The yellow metal, black gold, call them what you want; commodities have seen significant moves of over 6% in a single trading session in the last few days. The steep declines, and rallies in both Gold and Oil have seen significant volumes traded over the US public holiday, Thanksgiving.
US (WTI) and UK (Brent) crude have been trending lower since the start of 2014, down over 30% YTD, trading at a four year low. The move is a gift for airlines and Oil purchasers, but is seen as a risk to the stability of Oil producing nations such as Gulf countries. At the start of the year the risk was that Oil was for a price of up to $150/barrel and the drag this might be on global growth. However the rapid decline in price, below the level of break-even for some producers is now cited as a risk for producers going forward, and the ability to balance their expenditure, due to the drop in revenue.
OPEC’s meeting in Vienna last week was a disappointment to traders, as members didn’t vote to cut production to support the price in the short term. Some oil ministers have cited the oversupply to the market and boom in shale production in the US
US Oil (Jan) is trading at $69.11/barrel up from $68.37/barrel, (only 45 minutes ago..) the commodity roller-coaster continues— Abshire-Smith (@abshiresmith) December 2, 2014
Prior to Sundays “No” vote in the Swiss Gold referendum, gold had been lifted on the back of the potential change in central bank policy from the SNB, that would have required it to hold 20% of assets in gold. However the Swiss public rejected the initiative, which led to yellow metal being offered in early Asian trade at the Sunday open. During Monday’s trade Gold rallied from $1142/oz to reach a high of $1220/oz, a move of nearly $80 dollars during the session.
Current prices (9:35am London)
Spot Gold: $1194.95
Spot Silver: $16.20
US Oil January: $68.52
UK Oil January: $72.38