Oil and Gold Fundamental Outlook (Focus: Oil, Gold, Silver)

Crude Prices Continue To Decline As Markets Reconsider Outlook For Earnings

Tuesday, 07 April 2009 20:44:27 GMT
Written by Stefan Tifigiu, CFDTrading Research
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Crude prices fell for another day as unease over financials weighed on world indexes. Prices have been influenced by overall market risk trends for the past week and valuations seem to have become disconnected with traditional fundamental influences.

Commodities - Energy

Crude Continues To Drop As Markets Decline

Crude Oil (WTI) $49.050 -$2.000 -3.92%
Crude prices fell for another day as unease over financials weighed on world indexes. Prices have been influenced by overall market risk trends for the past week and valuations seem to have become disconnected with traditional fundamental influences. Much of the market’s optimism in the past week was led by positive impact that loosened accounting rules coupled with expectations for a better performing quarter would have on the broader financial sector. That same prospect now is the source of unease in the markets as financial valuations could swing in either direction. Crude prices had jumped up on expectations of a coming recovery. However, a significant turnaround for the economy will be very difficult until financial institutions will be free to lend again and spur up growth. Since many institutions continue to hold “toxic” assets on their balance sheets, the bad-bank plan may be key to triggering the recovery. The plan however remains unfinished in many key areas. Such issues as asset-pricing and lack of assurance of no retro-active government involvement threaten the plan’s effectiveness. Until those issues are addressed, the plan will not work and the economy will continue to remain credit-starved and stagnant. In the meantime, market focus will return to large stockpiles of crude and economic releases that suggest there will be further weakening of global crude demand. If tomorrow’s DOE figures continue to show large supplies, crude prices will decline further.



Commodities - Metals

Gold And Silver Regain As Unease Over Financials Grows

Gold $881.980 +$13.075 +1.50%
Gold prices regained some of the last few session’s losses as investors grew uneasy over soon-to-be released financial earnings reports. The sale of gold by the IMF, which led to weakness in prices yesterday, also began to let off pressure as the sale will take several years to complete and will likely have minimal market impact. Nevertheless, despite today’s gains and increased unease over the markets (conditions that would normally benefit safe-havens), it is unlikely gold will return to strength soon. Risk sentiment has dominated pricing and will likely continue to do so in the near-term. In the meantime, fundamentals that argue for price strength will raise volatility but with a stronger US Dollar as an attractive alternative, gold prices will likely continue to decline in the short to medium-term.

Silver $12.275 +$0.1350 +1.11%
Silver will continue to track any movements with Gold as the two historically move together. Given the return to risk-appetite, prices will likely remain weak for the near to medium-term, however fundamentally, the metals are in position to gain.

An extract from CNBC about oil price:

Threat of Oil Price Spike Remains: Former Shell Exec

Although oil prices should remain low for the next three to six months, the threat of surging prices remains, said John Hofmeister, former Shell president and CEO of U.S. operations.

"It's really sad," Hofmeister said, in an interview with CNBC. "We've lost half the drilling rigs in the country in the last seven months. The prices are probably going to stay down for some time."

However, this is setting the scene for another potential in spike in gasoline.

Although demand for oil has slipped, the world is still consuming more than 80 million barrels a day, he said. Hofmeister expects March numbers to show that demand was a little less than supply.

"The good news is the gasoline supply and demand is almost in equilibrium," he said. "But the refineries are operating about 80 percent."

If the Obama administration is successful with its economic recovery plan, oil prices will rebound, said Hofmeister.

"We're all going to have whiplash on gasoline prices and we'll be right back where we were a year ago," he said.

Tuesday, 14 April 2009 21:05:47 GMT
Written by Stefan Tifigiu, CFDTrading Research
Full Article

Commodities - Energy

Crude Declines Further As US Producer Prices and Retail Sales Disappoint

Crude Oil (WTI) $49.480 -$0.570 -1.14%
Crude prices continued to decline following disappointing US Retail Sales and Producer Price Index releases. The releases suggest continued weakness in the US economy, the largest global consumer of crude. Meanwhile risk appetite, which supported oil prices in recent weeks, has begun to ease up. Sentiment is changing as some analysts are posing questions over possible “accounting tricks” which may have inflated Wells Fargo’s profit expectations. Further compounding weakness for financials will be Goldman Sachs’ repayment of TARP funds. The move is expected to strain the financial sector and have mixed results on the company as well. These two factors could dent market expectations for positive valuations at other major banks and deter any further rallies in the near future. Meanwhile, crude demand, already at twenty-year lows, is expected to decline even further. On the supply side, crude stockpiles are projected to remain at record levels. Both of these factors point sharply toward lower crude prices. Unless news is released that supports a turnaround, spurs up equity rallies and helps offset these factors, crude prices will continue to decline.



Commodities - Metals

Gold And Silver Prices Continue Declines As Inflationary Risks Wane

Gold $890.200 -$5.600 -0.63%
Gold prices declined today after disappointing retail sales and producer price data were released. The figures suggest that the influx of capital into the economy from the Treasury and the Federal Reserve has yet to impact inflation. Needless to say, longer-term buyers may be positioning to gain from these risks which will likely emerge once a turnaround is formed. These buyers will likely result in some volatility in price-action. Short-term however, risk sentiment remains the dominant influence for prices. In the interim, risk appetite will be determined by expectations for financials. As a result, market momentum will likely continue to fluctuate until more concrete news or earnings data is released. Until then gold prices will show further modest declines in the near-term.

Silver $12.690 -$0.078 -0.61%
Silver prices declined today following gold. Given silver’s industrial applications, a slow-down in the economy may begin to have an impact. As a result any price gains silver may mirror in safe-haven metals may be offset somewhat by this factor. Expect silver to show modest declines in the near-term.

Tuesday, 28 April 2009 21:37:12 GMT
Written by Stefan Tifigiu, CFDTrading Research
Full Article

Crude prices continued to decline as markets remained wary of the the economic impacts of the swine flu outbreaks. While the summer driving season typically provides support for crude demand, drivers avoiding travel due to the possible pandemic may offset this support. This will return focus to sharp supply and demand pressures.

Commodities - Energy

Crude Declines As Fears Continue Over Economic Impact Of Swine Flu Outbreaks

Crude Oil (WTI) $49.590 -$0.5500 -1.10%
Crude prices continued to decline as markets remained wary of the the economic impacts of the swine flu outbreaks. While the summer driving season typically provides support for crude demand, drivers avoiding travel due to the possible pandemic may offset this support. This will return focus to sharp supply and demand pressures. In terms of supply, stock piles will remain at decade highs for the medium term. Demand meanwhile, will continue to feel the effects of the steep global economic contraction. Now that even the summer driving season may be at risk, there is very little in the way of logical support for such high crude prices. Nevertheless, risk sentiment has been and will continue to be the most influential factor in crude pricing. In this regard, equity investors have shown that there remains a substantial amount of risk appetite for US equities. So long as equity markets remain undecided and provide some level of support, crude prices will continue to trade near current prices. However, barring any equity rallies, crude markets will begin to cave in to fundamentals that point sharply toward lower prices. Expect crude prices to decline in the near-term.



Commodities - Metals

Gold Pares Gains On Automatic Sell Stops

Gold $894.000 -$12.480 -1.38%
Gold prices declined today as fund sell stops were hit when prices fell below $900. Despite the decline, gold remains in position to gain. The equity markets continue to wrestle with possibility of a recovery. Now that swine-flu outbreaks present further risk to the economy, and worries mount over how well capitalized financials are to withstand expected further losses, a high level of uncertainty remains in the markets. This will likely lead to modest price gains for safe-haven metals.

Silver $12.470 -$0.5150 -3.97%
Silver prices fell along with gold today. As stated earlier, silver has many industrial applications. As a result, declines in production activity may place some downward pressure on prices. Nevertheless, any heightened risk aversion that would benefit precious metal value will still benefit silver prices. Look for modest gains in the near-term.