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U.S. crude futures rallied from six-year lows a session earlier amid a weaker dollar, as a continuing draw in weekly stockpiles helped temporarily halt one of the worst routs in more than a decade.
On the New York Mercantile Exchange, WTI crude for September delivery wavered between $42.80 and $43.88 a barrel before closing at 43.22, up 0.15 or 0.34% on the day. On Tuesday, U.S. crude futures dove more than 4%, suffering its worst one-day fall in more than a month, to dip to its lowest level since 2009. On the Intercontinental Exchange (ICE), brent crude for September delivery traded in a tight range between 49.29 and 50.53 a barrel before settling at , up 0.45 or 0.91% on the session. The spread between the international and U.S. benchmarks of crude stood at 6.93, above Tuesday's level of $6.57. In its Weekly Petroleum Status Report on Wednesday, the U.S. Energy Information Administration (EIA) said U.S. crude inventories for the week ending August 7 fell by 1.7 million barrels, in line with forecasts for a 1.6 million decline. The moderate draw extends sharp declines from a week earlier when U.S. crude stockpiles plunged by 4.4 million barrels in the final week of July. At 453.6 million, crude inventories nationwide remain near its highest level at this time of year in at least 80 years. The announcement of the latest supply draw occurred one day after the EIA downgraded its latest projections for oil production growth for the remainder of 2015, as well as next year. For the rest of the year, the Energy Department expects crude output to rise by 650,000 barrels per day below previous forecasts of 750,000. In 2016, the EIA anticipates slower production growth of 130,000 bpd in comparison with prior estimates of 190,000. Last week, U.S. crude output declined by 70,000 bpd to 9.395 million bpd, its lowest level since early-May. “While U.S. crude oil production this year is expected to be 100,000 barrels per day less than previously forecast, oil output is still on track to be the highest since 1972," EIA administrator Adam Sieminski said in a statement. #TIEInstitute Gold prices fell from the previous session's three-week peak on Tuesday, as the U.S. dollar marched higher after China devalued its currency in a surprise move.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange shed $4.40, or 0.4%, to trade at $1,099.90 a troy ounce during European morning hours. A day earlier, gold rallied to $1,108.50, the strongest level since July 21, before ending the session at $1,104.10, up $10.00, or 0.91%. China's central bank devalued the yuan by nearly 2% on Tuesday, allowing the currency to fall to levels last seen in 2012, in an effort to make the country's exports more competitive and boost the economy amid lackluster growth. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.1% at 97.32 early Tuesday, coming off from lows of 97.08 struck on Monday. Traders continued to mull the timing of a Federal Reserve rate hike after Federal Reserve Governor Stanley Fischer said Monday that the Fed is concerned about low inflation and won't start to raise rates before it sees inflation returning to more normal levels. The comments sparked uncertainty surrounding a Fed rate hike in September and prompted some investors to argue that the central bank might hold off on raising rates until December. Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Fed will raise interest rates in September for the first time since 2006. Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise. Also on the Comex, silver futures for September delivery dropped 16.2 cents, or 1.06%, to trade at $15.13 a troy ounce. Prices surged to $15.37 on Monday, a level not seen since July 14, before closing at $15.29. #TIEInstitute Gold prices held slightly weaker in early Asia on Tuesday with the focus on China's continued slump and as investors mull the prospect of a Federal Reserve rate hike later this year instead of September.
On the Comex division of the New York Mercantile Exchange, gold for December delivery eased 0.08% to $1,084.70 a troy ounce. Silver for September delivery fell 0.21% to $14.450 a troy ounce. Copper for September delivery dipped 0.14% to $2.342 a pound. Overnight, gold futures inched down on Monday amid a stronger dollar, even as muted inflation data for the month of June provided support to dovish arguments for a delayed interest rate hike by the Federal Reserve. On Monday morning, the U.S. Department of Commerce's Bureau of Economic Analysis said consumer spending increased by 0.2% in June in line with analysts expectations, while personal income rose by 0.4% -- slightly higher than consensus estimates. Analysts forecast a 0.3% rise in incomes for the month. More critically the Core PCE Index, which strips out food and energy prices, inched up 0.3% for the month, up from a 0.2% increase for May. On a year-over-year basis, however, the gains were muted as the index only increased by 1.3%. At its July FOMC meeting last week, the Fed reiterated that inflation remains below its targeted goal of 2% over the medium term, commonly defined as a period of the next one to two years. The reading will likely bolster dovish viewpoints on the Fed for a delayed interest rate hike beyond this fall. Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising rates. Elsewhere, Gallup said in its monthly U.S. Consumer Spending Measure that self-reports from American consumers on a monthly basis averaged approximately $91 for July, up one dollar from its level in June. While the figure is slightly lower than its level from July, 2014, it is also higher than any other reading for the month since 2009. Over the last several months, consumer spending has remained relatively flat, according to Gallup's measure. #TIEInstitute |
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