- Tight Oil Supplies
- Shrinking Canadian and U.S Rigs
- Coronavirus Infection Concerns
Oil prices edged higher, Monday morning, supported by tighter supplies that continue to curtail glut in supply. Gold (XAU/USD) prices were also up by more than 0.5% as traders rushed to the Safe-Haven amidst concerns about the second wave of coronavirus infections.
Brent oil futures were up by more than 1.26% to $42.49, Monday morning, as West Texas Intermediate edged 0.73% to $40.12 a barrel.
Oil prices were up in the wake of reports that operated oil, and natural gas rigs fell to a record low in the United States and Canada. The drop is a big boost to the market that is already grappling with a glut in supply that has continued to take a toll on prices.
Oil exploration in the U.S shrank for the 14th straight week last week, conversely reducing active rigs, to levels last seen in 2009. Signs of rebounding oil demand worldwide also offer support to oil prices above the $40 a barrel level.
However, the spike in oil prices could be short-lived, given the ever-growing risk of COVID-19. A spike in infections in the U.S and China threatens to trigger a new round of lockdowns that could take a toll on demand that is already at historically low. A drop in demand could result in oil prices tanking even further.
Gold, on the other hand, continued to edge higher as traders bet on the precious metal as a safe-haven Monday morning. Rising virus fears continue to boost demand for bullion, which tends to do well in a crisis.
Spot gold prices touched highs of $1758 Monday morning before retreating lower in what could be attributed to traders taking profits.
Gold remains bullish in the market as the threat of the second wave of coronavirus continues to force traders to scamper for safety in safe-havens.