18.02.2015 - Increase in oil inventories will lead to another drop in prices
The price of gold fell against the background of Chinese traders closing positions before the long weekend, which is associated with the celebration of New Year in China. We recall that the country is the largest consumer of gold in the world. It is worth noting that the demand for gold as a defensive asset is supported by uncertainty about the negotiations on Greek debt restructuring. An additional factor that may enhance the geopolitical tensions could be deteriorating situation in Ukraine, where military hostilities continue. We expect low activity of investors in the coming days due to holidays in China, but note the possibility of increased volatility in prices today after the publication of minutes of the previous meeting of the Federal Reserve. Our medium-term outlook for gold remains positive, but the price decline is likely to continue to the levels of 1180-1200 dollars per troy ounce in the near future.
The price of Light Sweet crude oil could not continue to grow despite the news of disruptions in oil supplies from Iraq, where on the one hand, the confrontation with the militants of ISIS, and on the other hand the supply interfered with bad weather conditions. Conservation of about a third of the rigs in the United States has not led to a decrease in oil inventories in the country and they continue to grow along with the production of oil. Tomorrow the course of trading will be affected by the data on oil and petroleum products inventories in the United States. We maintain our medium-term negative outlook due to the oversupply of oil on the market and recommend holding short positions with the potential of reduction up to 45.00 and 40.00 dollars per barrel.