Crude oil futures traded higher during U.S. afternoon trade, Thursday, after China's central bank surprisingly cut its benchmark interest rate to stimulate growth in the world's second-largest economy. In addition, oil prices climbed on the back of growing hopes of further easing by the Federal Reserve as well as renewed concern over a disruption to Iranian oil supplies. It was China's first rate cut since December 2008, when the world economy was in the midst of the financial crisis. China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Growing expectations the Federal Reserve will consider more action to stimulate growth in the U.S. further supported prices. The nation envoy to the International Atomic Energy Agency said Wednesday that Iran will never suspend its uranium enrichment, nor will it permit its national security to be jeopardized. The comments came ahead of talks scheduled for June 18 and 19 in Moscow between Iran and Western powers. Iran and Western nations have been locked in an ongoing stand-off over Tehran's nuclear program. The Islamic Republic produces about 3.5 million barrels of oil a day, making it the second-largest oil producer in the Organization of Petroleum Exporting Countries.
GOLD
Gold futures were sharply lower during U.S. morning trade on Thursday, extending overnight losses after Federal Reserve Chairman Ben Bernanke said the Fed stands ready to act if stresses escalate, but refrained from offering any details. Gold sold off shortly after Bernanke gave his Congressional testimony about the state of the U.S. economy. While Bernanke said the European crisis posed significant risks to the U.S., the economy was expanding at a moderate pace. Bernanke added that while the Fed remains ready to act if stresses escalate, he failed to offer any further clues on the central bank’s direction on further easing measures.