Oil prices give up two-week high on renewed concerns about global demand
Oil prices fell 2% in European trade off two-week highs on active profit-taking and amid concerns about global demand,
Such concerns were renewed as global central bank continue to raise interest rates amid efforts to control high inflation, in turn accelerating the recession pace of the global economy.
Global Oil Prices
US crude fell 2.1% to $70.89 a barrel, with a session-high at $72.71, while Brent fell 2% to $75.43, with a session-high at $77.16.
US crude rose 2.1% on Wednesday, with a two-week high at $72.68, while Brent climbed 1.9% to $75.48 a barrel, the highest since June 8 as dollar dipped.
Global Demand
Bank of England surprised markets with a 0.5% rate hike at the June 22 meeting to 5%, the highest since 2008, and surpassing expectations of a 0.25% rate hike.
Swiss National Bank raised interest rates by 25 basis points at the June 22 meeting to 1.75%, the highest since before the financial crisis in 2008.
The European Central Bank already raised interest rates by 25 basis points last week to 4%.
Higher interest rates weigh negatively on growth rates and could slow down fuel demand.
US Stocks
The American Petroleum Institute reported a decline of 1.25 million barrels in US crude stocks in the week ending June 16, while analysts expected a drop of 0.4 million barrels.
Now investors await official data from the EIA today, expected to show a buildup of 0.3 million barrels.
Gold hovers near three-month trough on global interest rates progression
Gold prices fell in European trade for the fourth straight session on Thursday, almost hitting three-month lows plumbed recently, as global central banks continue to increase interest rates to combat inflation.
The Swiss National Bank announced a 0.25% rate hike to 15-year highs, with Bank of England expected to announce a similar decision, while Fed Chair hinted strongly at two more US rate hikes later this year.
Gold Prices Today
Gold prices fell 0.3% to $1,927 an ounce, with a session-high at $1,935, after losing 0.2% on Wednesday, the third loss in a row, marking a three-month low at $1,919 following Powell's Congressional testimony.
Global Rates
Swiss National Bank raised interest rates by 25 basis points at the June 22 meeting to 1.75%, the highest since before the financial crisis in 2008.
Bank of England is expected to announce a 0.25% rate hike to 4.75%, the highest since 2008.
The European Central Bank already raised interest rates by 25 basis points last week to 4%.
Higher interest rates weigh negatively on gold futures and hurt their appeal.
Powell
Fed Chair Jerome Powell said today that more interest rate hikes could be undertaken in the future to rein in inflation.
In his testimony ahead of Congress, Fed Chair said the decision to hold interest rates unchanged last week was likely a transient lull and not a sign of ending the cycle.
Powell said in his prepared notes that all participants in the Federal Open Market Committee believe it'll be appropriate to raise interest rates again this year.
He noted that inflation has calmed down but remains much higher than the 2% target.
Powell will complete the second part of his testimony later today in the Senate.
Fed Rates
Following Powell's remarks, chances of a 0.25% Fed rate hike in July fell from 77% to 72%.
The SPDR
Gold holdings at the SPDR Gold Trust fell 1.73 tones yesterday to 932.3 tones, the lowest in a week.
