Hawkish Federal Reserve Statement Reverses Gains in Crude Oil Prices

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Commodities Trading

: 31 October 2014

With the Fed ending its asset purchasing program, a stronger dollar ensured that energy investors were content to continue rushing for the exit.

So, reinforcing the bearish trend, WTI crude resumed its plunge, dropping $0.92 to $81.02.

Despite record physical buying by the Russian central bank, gold posted a slump of $12.7 yesterday, crossing back below the psychological $1,200 mark.

Ongoing positive results from corporate America and better-than-expected GDP is clearly too much to ignore, even if there is growing uncertainty in Europe.



Commodities Trading

: 30 October 2014

Early strength for the euro against the dollar drove crude futures higher yesterday.

However, a sudden plunge after the FOMC statement, together with a slide in stock markets, pushed oil prices back down.

Despite the late reversal, the initial gains meant that WTI managed to end the day up $0.40 at $81.55 per barrel.

It was not a good day for gold spread betting bulls as the Fed's bond buying came to an end.

This hit demand for alternative assets which in turn triggered a sell off in the precious metal.

As a result, gold prices lost $16.2 to $1,212.



Commodities Trading

: 29 October 2014

Renewed optimism about the US consumer was a breath of fresh air for oil futures, with WTI posting a $0.93 rally to $81.59 per barrel.

However, weaker oil demand is a reality that the market has to deal with and the success of US fracking could make it hard for the current rebound to solidify into an upward trajectory in the immediate future.

Before the conclusion of the all important Fed meeting, gold prices gained $2.6 to $1,228.4 amid reports that Russia and Turkey were in the market to add more bullion to their reserves.

The precious metal is still struggling to post a meaningful recovery after recently dipping below the $1,200 mark.



Commodities Trading

: 28 October 2014

With the oil market remaining oversupplied amid weak demand, a Goldman Sachs report suggests that the outlook for crude oil does not look particularly healthy.

Yesterday, a brief dip below the $80 mark made headlines, with WTI hitting its weakest level in more than two years.

However, the market did manage to recover most of its initial losses, closing just $0.61 lower at $80.65.

News that holdings in Exchange Traded Funds backed by gold declined to the lowest in more than five years sent the precious metal $4.8 down to $1,225.5.

Having said that, even though the Fed are set to end QE, which does not bode well for gold prices, it seems more likely that they will delay raising rates, which may lend some support.



Commodities Trading

: 27 October 2014

It has been 'whispered' to the energy markets that a cut in Saudi Arabia's oil supply to the markets is not equivalent to a cut in production.

If anything the output increased, raising concerns that the market is still awash with supplies despite a resilient US economy keeping demand at healthy levels.

As a result, WTI crude dropped another $0.60 to $81.33 per barrel.

By and large, the Fed is still expected to end QE3 at the end of October, thus keeping gold prices under pressure and seeing the market lose $2.3 to $1,230.8.

Having said that, the timing of a potential interest rate hike is another matter and the more the Fed delays the move, the more support the precious metal might see.


By Jonathan Sudaria, 31 October 2014


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