Oil Below $40, Gold Rises; Markets Expect BoE Meeting

Crude Oil Settles Below $40 amid Oversupply

Crude oil is trading at $39.74 up 0.44% per barrel as oversupply continues to pull the black gold down. Brent oil gained 0.39%, trading at $42.08.

On Wednesday, U.S. crude oil found support following Tuesday’s API oil inventory data. The API data showed a 1.3 million draw the week-ending July 29, in line with consensus forecasts. However, the reduction was larger than the one reported the previous week.

The EIA stockpiles report will be released today at 14:30 GMT.

Gold Rally continues

Gold continues to climb on Wednesday as chances for another rate hike in the US decreased. Currently, the chance for a rate hike in September decreased to 12% according to Fed Funds Futures. Gold is trading at $1365.34, 0.24% from the previous day just below two years high.

Markets expect BoE meeting tomorrow and nonfarm payrolls data to be released on Friday to get more clues of further developments by policymakers. The ADP jobs report will be released today at 12:15 GMT and could provide an indication for the nonfarm payrolls data. Higher than expected data will breathe some life into a possible rate hike by the Fed in December.

BoE Meeting in Focus

The BoE meeting tomorrow at 11:00 GMT will be a major key for markets as investors expect further stimulus actions by the BoE. The Bank of England is expected to cut interest rates to record low of 0.25% on Thursday.

Additionally, investors will be watching Mark Carney’s speech as the possibility of reviving the stimulus program in the form of asset purchase come to action. The British Pound rose against the US Dollar on morning session, trading at 1.3365.

UK Purchasing Managers’ Index (PMI) dropped to 47.4 last month, the lowest level since December 2012. The data can add more pressure to the BoE meeting tomorrow.

Published by

Tom Chen

Tom Chen is a financial analyst as well as an active trader. Tom began trading currencies and commodities in 2005 which during this time developed and refined his approach. Tom Holds BA in Economics and a Journalism diploma from the 'London School of Journalism'.