Energy Sector Slumps Amid IMF Warning of Overheating Financial Markets

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Financial Spreads: Spread Betting and CFD Trading

Commodities Trading

: 10 October 2014

The fear that growing oil supplies throughout the world are outpacing a slowdown in energy demand continue to put downside pressure on crude prices.

Yesterday, those concerns were accentuated by a sharp sell off in stocks coupled with a stronger dollar.

The result was a steep tumble for WTI prices, which lost a hefty $3.34 to finish at $84.34 per barrel.

Has the table turned for gold as the Fed has second thoughts about raising rates?

Although it is too early to know that, the precious metal has enjoyed a nice rebound over the last week, yesterday gaining $2.5 to $1,223.6.

Commodities Trading

: 09 October 2014

The US released its weekly crude oil inventories report which indicated a larger than forecast build of 5 million barrels vs estimates for a 2.1 million barrel increase.

The discrepancy ignited a renewed slump in WTI prices, which lost $0.73 to $87.72.

A sharp rally in shares after the FOMC minutes did little to reverse that plunge towards the close.

The realisation that a rise in interest rates might not be on the cards just yet came as a breath of fresh air for gold which rallied $12.1 to $1,221.5.

The move was undoubtedly helped by a weaker dollar and ongoing reports of heightened physical demand from Asia.

Commodities Trading

: 08 October 2014

The energy complex was definitely not helped by the IMF's 2015 growth report which suggested that there is a risk of financial markets overheating and that equity markets are 'frothy'.

The comments were interpreted as a sign that oil demand could slump, inspiring a significant drop in WTI crude futures as the market lost $2.04 to $88.43 per barrel.

The woes look set to continue this early morning, as oil prices are still on the back foot.

The gold market managed to extend its rebound yesterday, gaining $1.2 to $1,208.4.

The move came following a pickup in physical demand during the Indian festival season and as Chinese buyers returned after a long weekend break.

The gloomy outlook from the IMF also offered some support as participants considered hoarding extra gold for a rainy day.

Commodities Trading

: 07 October 2014

West Texas Intermediate moved back above the $90 mark on expectations of resilient oil demand in the US, the world's biggest consumer.

The energy rebounded by $0.70 to $90.46, however, with a trade war underway among OPEC members, the possibility of further price weakness should definitely be taken into consideration.

It appears that a drop below the $1,200 level attracted plenty of buyers into the gold market who pushed the metal $15.4 higher to $1,206.8.

A weaker US dollar led the recovery but the festival season in India undoubtedly added extra support.

Commodities Trading

: 06 October 2014

Aramco, Saudi Arabia's state run oil producer, reduced its crude oil export prices last week, signalling its readiness for a price war with other OPEC members.

The move added additional downside pressure to oil prices, which were already being driven lower by a stronger US dollar and news of plentiful supplies, and so WTI plunged by $1.63 to $89.75 per barrel.

As the news came in that US payrolls had beaten forecasts, it felt like a knockout blow for gold which nosedived by $21.8 to $1,191.6.

The precious metal continued to head south overnight and is potentially on course to challenge the lows of 28 June 2013 just above the $1,180 mark.

By Jonathan Sudaria, 10 October 2014

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