Sponsored by Digital Look Events

Commodities: Oil and gold rise despite dollar strength

News for Spread Betters

PreviousPrevious
NextNext

There's a new Investor Edition of CMC Markets' spread betting platform... and it's exclusive to DigitalLook.com users...

Get full details about Marketmaker:Investor Edition here. Advertisement

Date: Wednesday 12 Mar 2008

LONDON (ShareCast) - The price of crude oil moved higher again today though the rise was not of the magnitude seen in recent days, as the Federal Reserve's $200bn cash injection into the banking system raised hopes that the US economy will avoid sliding into a recession.

Nevertheless, with the US dollar expected to remain under pressure as a result of predictions that the Fed’s cash injection will be followed up by a meaty interest rate cut, the price of the dollar-denominated fuel reversed early losses. Crude for April delivery rose 85 cents to close at $108.75 a barrel in New York, and edged a little higher still in after-hours electronic trading.

The rise came despite a forecast from the International Energy Agency (IEA) of reduced demand for oil from the US and Europe as those regions experience an economic slow-down. The IEA reduced its forecast for oil-product demand by 80,000 barrels to 87.5m barrels of oil equivalent a day this year.

An update on US crude oil stockpiles is due to be announced on Wednesday, with industry analysts expecting inventories to have risen by 1.6m barrels over the last week.

The price of gold tended firmer, more than recovering Monday’s fall. Gold for April delivery climbed $4.20 to $976 an ounce in New York, though at one point it was trading as low as $964 in the aftermath of the Federal Reserve’s big announcement.

The gain was achieved despite the strength of equities and the rise of the US dollar – both events normally considered as bearish indicators for the yellow metal.