KBC Market Research Desk
KBC Bank
Crude
After hovering around 99 USD/bbl Wednesday, the oil price fell again on Thursday and currently is seen below 98 USD/bbl. The oil price fell yesterday despite news that production in Libya dropped by about 200 thousand barrels per day (kbpd) due to fights between army and rebels.
After hovering around 99 USD/bbl Wednesday, the oil price fell again on Thursday and currently is seen below 98 USD/bbl. The oil price fell yesterday despite news that production in Libya dropped by about 200 thousand barrels per day (kbpd) due to fights between army and rebels.
Although we continue to bet on a gradual decline in oil prices in the medium to longer term, our outlook for the forthcoming months remains cautious, due to a high level of geopolitical risk. For example a, sudden sharp increase in Libya’s oil production has many times in recent past proved only to be short-lived. The accelerated rise in global oil production could also influence OPEC policy and the cartel may even reduce its oil production quota in November (although some members recently questioned such a move). This could also curb any further significant price fall.
Precious metals
Gold price was under pressure later on Wednesday as FOMC concluded its meeting without changing its forward guidance. At the same time, the projected Fed Fund rate path was substantially shifter higher (and even further away of current market expectations than before) which triggered modestly hawkish response in markets. Gold price therefore dropped to the lowest level since the beginning of 2014.
Although pace of a year-on-year decline in gold prices (quarterly averages) slowed down considerably, we still remain cautious towards the rest of this year as well as the next year. Continuing normalization of Fed’s monetary policy should continue to be the key factor that will, in our view, push gold price below 1200 USD/toz in the end of this year.
Chart of the day:
The oil price remains comfortably below 100 USD/bbl.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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