28.05.2015 - Oil will continue to fall

The price of gold continues to fall against the backdrop of a strong US dollar. Investors are wary of the negative impact of rising interest rates the Fed on the gold price. We recall that the Fed may raise interest rates this year and the timing of increase will depend on economic data. Demand on the part of Asian consumers remains weak despite low prices. Tomorrow is forecasted increase of volatility in connection with the release of data on US GDP growth in Q1. We maintain a medium-term negative outlook, but expect a further drop today.

The price of Light Sweet crude oil has continued the decline due to a correction after a strong rise in share price in the last month. Fundamental factors continue to put pressure on the oil quotations. Thus, the excess supply of oil is about 1.5 million barrels a day, the volume of production in the United States reduced the minimum rate and we can see the resumption of growth in the number of drilling rigs after their sharp decline. Demand in Japan and China has grown, but this fact did not neutralize the excess of oil on the market. The central topic of the next month will be the cancelation of sanctions on oil exports from Iran. We maintain a medium-term negative outlook on oil and recommend holding short positions.

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