Oil is falling fast in early morning trade, breaking the
psychologically critical $70 level as persistent worries about
Europe's sovereign debt hampering global growth pushes down energy
demand. A strengthening dollar following the International Monetary
Fund's urging to get Spain to do more to reform its financial
sector has also triggered investors to continue their sell-off of
As for gold, it is down slightly and many analysts expect the
yellow metal to face selling pressure in the near term as investors
look to cover their losses in other markets. Still, gold is seen
retaining its allure as a safe haven in the longer term, especially
if investors remain rattled by the financial situation in
At 0750 ET, Brent crude is 2.9% weaker at $69.14 a barrel, while
light sweet crude is down 3.5% at $67.77 a barrel, and natural gas
is 0.3% lower at $4.00 a million British thermal units.
Gold is down 0.1% at $1,192.40 an ounce, while silver is down
1.4% at $17.74 an ounce, and copper is 3.2% weaker at $3.05 a
Market players will be watching carefully the release of the
latest weekly U.S. crude inventories data by the American Petroleum
Institute later in the day, and by the U.S. Department of Energy
Wednesday morning. Most analysts expect inventories to continue
increasing due to rising imports.
The rapid decline in oil prices has yet to rattle major crude
exporters, however, at least in public. Kuwait's oil minister
Sheikh Ahmad al-Abdullah al-Sabah said that OPEC has no plans to do
anything about the 26% drop in prices this month, and that the
Organization of Petroleum Exporting Countries has no plans to hold
an emergency meeting.
Meanwhile, Tesoro Corp.'s (
) Los Angeles refinery reported a small hydrocarbon release from a
line which was an isolated incident, according to a notice filed
with the California Emergency Management Agency. The refinery
produces about 100,000 barrels a day.
In the metals market, Anglo American plc (
) is seen resuming paying out dividends in August, according to
Goldman Sachs. Analyst Peter Mallin-Jones said in a report that
Anglo American's finances are in a "healthier position" as it sold
off assets to reduce debts on the one hand, and metals prices
increased on the other. Goldman raised its rating for Anglo
American to conviction buy from neutral.
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