The price of Brent Crude best known as black gold has skyrocketed to a meager 1% during CY12TD as compared to CY11 average price of $111.8.
However, phenomenal rise has been witnessed in the price of the commodity during the month of August-12, as both Brent Crude and WTI have soared by 10% and 7%, respectively. “This is mainly due to the US inventory numbers that fell in the aftermath of hurricane Isaac,” viewed the analysts at InvestCap Research.
The said hurricane, they said, had left more dent on the US than first feared, and now the world is expected to feel the heat in the shape of rise in the prices of crude oil. The hurricane, which originated from the Gulf of New Mexico, the hub of US refinery and oil production, caused inventory slippage of 7.4 million barrels against forecast of 3-5 million barrels.
Consequently, the Aug-12 ending inventory levels reached the lowest position in the preceding two years. “Now as the natural phenomenon has subsided, we expect additional buying to come in from the US as the country aims to up the level of its oil stocks,” the analysts said.
In addition to upping the oil inventory, the analysts expect better US job data coupled with ‘unlimited’ bonds purchase by the European Central Bank (ECB) are expected to positively influence the demand of crude oil, thus prices are expected to remain on the higher side.
During the month in review, gold posted a significant growth of 2.3%MoM rising to $1692/oz.
Europeans are opting for Gold as a safe haven for their precious investment.
At the same time Silver is also following the trend as it surged by 5.5%MoM to reach at $29/oz in Aug-12.
The reason behind the increase in precious metal prices is predominant buying on the back of seasonal jewelry demand from India and China.
The gold is attracting investors’ interest as the uncertainty regarding the recession in Europe is expected to subside after the ECBs announcement that the policymakers had agreed to an unlimited bond-purchase program to help stabilize the European region. It has recently touched $1,709/oz. in the int’l markets.
On the other hand, silver also rose to its highs of $32.62.89/oz.
“We predict gold will rise further as the demand from Europe (investing in the commodity) coupled with buying from China, India and Russia to keep the demand for gold high. Therefore, we foresee the gold to touch 1,750/oz in the near future, while silver is also expected to follow the same trend as it considered the alternate for gold in investment and in consumption for jewelry manufacturing,” said the analysts.
