Oil hits week highs after steep US inventory drop
Oil prices rose in European trade for the third straight session, hitting week highs as US crude stocks decline according to official EIA data.
Prices were also boosted by dollar's decline against major rivals, making dollar-denominated commodities cheaper to holders of other currencies.
Global Prices
US crude rose 1.85% to $81.86 a barrel, the highest since November 23, while Brent added 1.8% to $88.20 a barrel, the highest since November 23.
US crude rose 2% on Wednesday, while Brent advanced 2.1%, the second session in a row, away from 11-month lows.
US crude rose 2% on Wednesday, while Brent added 2.1% in the last session, away from 11-month lows.
Oil prices lost 6.5% in November, the fifth monthly loss in six months amid concerns about global demand, especially demand in China.
US Stocks
The Energy Information Administration reported a drop of 12.6 million barrels in US crude stocks to 419.1 million barrels last week, while analysts expected a drop of 3.2 million barrels.
Gasoline stocks rose 2.8 million barrels to 213.8 million barrels, as distillate stocks rose 3.5 million barrels to 112.6 million barrels.
The Dollar
The dollar index fell over 0.5% today, plumbing four-month lows at 105.30 against a basket of major rivals.
Fed Chair Jerome Powell said the pace of rate hikes will be slowed down starting from the December meeting as the bank rebalances its risks.
Following the remarks, markets now put an 80% chance of a 0.5% rate hike by the Fed in December, and a 20% only for a 0.75% rate hike.
OPEC+
OPEC+ countries are expected to convene soon in December, with analysts estimating that weaker demand from China could nudge OPEC+ to cut output once more.
On other news, initial US data on crude inventories will be released today, expected to show a drawdown for the third week in a row, while tomorrow, official data will be released.
Dollar sharpens decline to four-month lows after Powell's speech
Dollar declined in European trade for the second straight session against a basket of major rivals, plumbing four-month lows after Fed Chair Jerome Powell's speech, which bolstered the case for a 0.5% rate hike in December.
Later today, investors await important US data on consumer sending in October and unemployment claims.
The Index
The dollar index fell 0.55% to 105.30, the lowest since August 12, with a session-high at 105.89.
The dollar index closed down 0.9% yesterday, the first loss in four days after Powell's bearish remarks.
The dollar index lost 5.1% in November, the second monthly loss in a row, and the largest since September 2010 as inflation slowed down.
Powell
Fed Chair Jerome Powell said the pace of rate hikes will be slowed down starting from the December meeting as the bank rebalances its risks.
Following the remarks, markets now put an 80% chance of a 0.5% rate hike by the Fed in December, and a 20% only for a 0.75% rate hike.
Data
Now markets await a basket of important data later today on US consumer spending and unemployment claims to gauge the next Fed move.
Such data will offer important clues on the health of the economy in the fourth quarter of the year after growing by 2.9% in the third quarter, a brisk and forecast-beating pace, exiting contraction in the first half of the year.
Gold scales two-week high after Powell's remarks on interest rates
Gold prices rose in European trade for the third straight session, scaling two-week highs and almost hitting multi-month highs as the dollar declines against major rivals.
Dollar's decline comes following Fed Chair Jerome Powell's remarks about slowing down the pace of rate hikes starting December.
Prices Today
Gold prices rose 0.85%% to $1,783 an ounce, the highest since November 16, after rising over 1% yesterday, the second profit in a row following Powell's speech and dollar's decline.
Monthly Trading
Gold prices spiked 8.2% in November, the first monthly profit in eight months, and the largest since July 2020.
Gold snapped the longest monthly losing streak in October, which extended for seven months, plumbing back then 2-1/5 year lows at $1,614.
The latest huge monthly profit came on aggressive short-covering after gold prices hit multi-year lows in October, while US inflation slowed down considerably as well, paving the way for a less aggressive policy stance by the Fed.
The Dollar
The dollar index fell over 0.5% on Thursday, sharpening losses for another session and plumbing four-month lows at 105.30 against a basket of major rivals.
Fed Chair Jerome Powell said the pace of rate hikes will be slowed down starting from the December meeting as the bank rebalances its risks.
Following the remarks, markets now put an 80% chance of a 0.5% rate hike by the Fed in December, and a 20% only for a 0.75% rate hike.
Estimates
We here expect gold prices to continue moving positively with a solid chance of scaling four-month highs and climbing above $1,800 once more.
The SPDR
Gold holdings at the SPDR Gold Trust remained flat yesterday at 908.09 tones.
