Oil prices steadied on Thursday, taking a breather after gains spurred by rising tension in northern Iraq following the semi-autonomous Kurdistan region’s vote
Oil steadies as North Iraq, Kurdish pipeline stays open – Oil prices steadied on Thursday, taking a breather after gains spurred by rising tension in northern Iraq following the semi-autonomous Kurdistan region’s vote for independence in a referendum. “Profit taking and the fact that Kurdish oil exports seem unaffected by the referendum pushed crude lower,” said Tamas Varga, analyst at London brokerage PVM Oil Associates. “But I think the market will strengthen again. Kurdistan and Northern Iraq now export 500,000-550,000 barrels per day (bpd). That would be a big loss to the market,” Varga added. Iraqi Kurdistan voted overwhelmingly on Monday in favor of independence, prompting Turkish President Tayyip Erdogan to say he could use military force to prevent the formation of an independent Kurdish state and might close the oil “tap”. Turkey said on Thursday it would deal only with the Iraqi government on crude oil exports, “restricting oil export” operations to Baghdad. U.S. refiners are still returning to full operations after Hurricane Harvey last month, but gasoline stocks surprisingly rose and stocks of distillates fell less than anticipated. While this week’s U.S. data gave a mixed picture, the outlook for global oil demand has strengthened, analysts say. That complicates efforts by the Organization of the Petroleum Exporting Countries and other major producers to push oil higher through output curbs, as every hike in price encourages more U.S. production.
Gold Extends Slide to Lowest in a Month After Trump Tax Plan – Gold prices extended losses from the prior session on Thursday to hit their lowest level in around a month, as investors shunned safe-haven assets following the unveiling of a long-awaited tax reform plan stateside. Investors stateside cheered the tax reform plans, with the U.S. dollar climbing to a one-month high against a basket of currencies, while financial stocks and Treasury yields rose. Despite market optimism, the proposal still faces an uphill battle in Congress, with the Republican party divided over it and Democrats hostile. Interest rate futures are now pricing in about an 80% chance of a December Fed rate hike according to Investing.com’s Fed Rate Monitor Tool, up from under 40% just a few weeks ago. Looking ahead, investors awaited final figures on growth later in the day. Comments from soon-to-depart Fed Vice Chair Stanley Fischer will also garner some attention. Platinum fell to a discount against palladium for the first time since 2001, as demand expectations for the two assets diverge, amid waning demand for diesel cars.
Short-sellers Won’t Budge Unless the Heat Lingers – Natural Gas prices rose last week in response to high heat in several key areas in the United States. Although the market rallied, it stayed within the previous week’s wide range, suggesting investor indecision and impending volatility. Last week’s price action also strongly suggests the market is in the strong hands of some serious short-sellers who didn’t blink much when the weather services forecast some of the hottest temperatures of the year. They could be saying, “it’s summer, it’s supposed to be hot” which basically means “show me the demand”.
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