Home Forex News Oil Turns Bearish on Demand Concerns Amidst COVID-19, Gold Rallies

Oil Turns Bearish on Demand Concerns Amidst COVID-19, Gold Rallies

168
0
  • Coronavirus Concerns
  • Oil Sell-Off Pressure
  • Gold Resurgence

Oil prices remained under pressure early Friday morning as fears over a second wave of coronavirus infections rattled traders in the oil market. Gold, on the other hand, remained range-bound after receiving support on the Federal Reserve opting to retain interest rates at record lows.

Oil Prices Tank

Oil prices tanked initially tanked by as much as 2% as traders remained wary of a second wave of coronavirus infections affecting oil demand, conversely leading to a further glut in supply. West Texas Intermediate was down by 2% to $35.69 a barrel as Brent Crude Futures fell 1.5% to $37.97 a barrel.

Oil rally at the back of an uptick in demand appears to have come to an end on prices struggling to stay above the $40 a barrel level. Slow growth in demand has been the biggest undoing likely to get worse amidst the possibility of further lockdowns to curb further spread of the coronavirus.

Data by U.S information Administration indicates a surprise build in inventory. U.S stockpile levels were up by 5.7 million barrels for the week ending June 5 to a record high of $538.1 million. The prospects of the U.S going back into lockdown has increased on the number of people infected, surpassing the 2 million mark.

Renewed lockdowns in some of the world’s biggest economies should lead to a further decline in demand, which is likely to trigger a further slump in oil prices. Oil benchmarks are already heading to their weekly losses, Brent having dropped by 10% and U.S crude by about 10% as well.

Gold Bullish Outlook

Gold, on the other hand, is heading for a massive weekly gain as fears continue to grip the capital markets. The Federal Reserve pledging to keep interest rates at the lowest level continues to fuel risk sentiments in the market, forcing traders to rush to safe havens like gold.

While Gold did pull lower on Friday trading session, the same can be attributed to profit-taking as traders continue to consolidate gains. Gold futures were down by 0.36% to $1733 but likely to rebound as risk sentiments continue to build in the capital markets.

LEAVE A REPLY

Please enter your comment!
Please enter your name here