Oil keeps rolling
It appears that crude prices are still on a one-way street headed towards USD 100 oil. The improving demand outlook and vulnerable supply situation suggest the oil market will remain tight for the foreseeable future. It seems like the list of disruptions to supply keeps on growing, in the past week the following countries have been impacted: Libya, the US (North Dakota), Peru, Iraq to Turkey, UAE, and Kazakhstan.
The lack of investment in new wells suggests the oil market will remain very tight going forward and that should support higher prices deep into the summer.
Gold
Gold prices surged as the bond market selloff appears to be over for now. Gold traders used the London Bullion Market Association auction as the catalyst to send prices tentatively above the upper boundaries of its recent trading range. After the 10-year Treasury failed to reach 1.90%, that was the all-clear signal for many traders to pile back into risk assets such as commodities.
It is important to note that Barrick Gold (NYSE:GOLD) reported preliminary fourth-quarter sales volume and production levels that came in better-than-expected, supporting a tighter market.
Gold wasn’t supposed to break above the USD 1840 level before next week, so it should be interesting to see if this rally sticks.