Tue, June 18, 2024

Commodities: What is up with WTI Crude and Gold?

Oil prices are increasing as OPEC’s agrees on the meeting date

Oil prices are rising as after several weeks of price fluctuations because of reduced demand coupled with the trade war. West Texas Intermediate (WTI) crude oil prices went up by 79 cents and reached $54.55 for a barrel. Brent oil price also increased and to more than $62 for a barrel. There are a couple of factors thanks to which WTI crude oil prices became more expensive.

The primary reason which gave a boost to oil prices is that OPEC reached an agreement regarding the date. The meeting will take place on the first day of July for OPEC members and the following day with the non-OPEC member states. Initially, the meeting had to take place before the end of June, but Russian officials urged to postpone this meeting to July.

The negotiations were tense as Iran was against this move. Finally, officials managed to find the common language and will discuss these issues in July. The central topic of the meeting is the possible reduction of daily oil production.

The agreement which is in place envisions cutting the daily output by 1.2 million barrels, but the deal will cease to work by the end of this month. The chances that decreased daily consumption will continue are high as member states are willing to continue this policy.

Gold Price News

Commodities sector benefit from the uncertainty

Gold prices continue to increase, and the demand for this precious metal is becoming even more tangible. The price of one ounce of spot gold reached $1,349.  Right now, gold prices might achieve the highest point of this year. The current rates are higher than what the market experienced since July of 2016. The U.S Federal Reserve meeting ended yesterday.

There is no timeline regarding the possible interest rate reduction, but policymakers signaled a willingness to cut the rate before the end of the year. This uncertainty helped the gold prices to strengthen its already strong position.

Deputy chief investment officer at DoubleLine Capital Jeffrey Sherman gave several reasons why he believes that investing in gold is a good idea. Investing in government bonds and the U.S dollar is riskier than in gold. Government debt is rising and will likely be able to reach record levels. He predicts that the gold prices will suppress the current rate more and will reach $1,400 for one ounce of gold.

Commodities play a significant role when it comes to the global economy.  Both gold and oil are becoming more expensive. Diminished stocks and upcoming OPEC meeting resulted in an increase of WTI as well as Brent crude oil prices. Gold is on the rise for several months. According to the forecasts, gold prices will continue its journey to the top during the upcoming days.

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