Abundant oil supply depresses oil prices

Daily Analysis - 21/01/2020

Oil outlook favors supply

Oil dropped following a rise to its to its highest level in more than 5 days while forecasts of abundant world oil supplies press the fears regarding confusion in Iraq and Libya. Brent futures earlier grew to $66 a barrel while Libya’s oil production nearly stopped when armed troops locked a significant pipeline. Closing that pipeline critically disrupted the output from the county's largest oil project. Also, an OPEC associate country Iraq, increasing demonstrations suspended the operation last Sunday at a field. Nevertheless, a TD Securities commodity strategist Daniel Ghali said “The oil market has been conditioned to look past any immediate supply disruptions,” and added “We really are in an oversupplied market.”

Gold retraces back after rising

On Monday, Gold surged to its most powerful level in more than a week following a missile hit in Yemen during the weekend igniting geopolitical uncertainties and supporting the metal’s safe-haven demand. Spot gold went up 0.3% at $1,560.88 per ounce, following a touch of its most powerful level since Jan. 10 at $1,562.50 in the beginning of the trading session after that the yellow metal retraced back to $1561.09. U.S. gold futures were even at $1,560.19.

The safe haven Yen on the move

On Tuesday the popular safe haven Japanese yen dropped to 109.87, retracing back versus the greenback while the spread of a disease that looks like pneumonia in China started an unexpected round of uncertainty and moved Asian stocks down. The spread of the virus is however in its initial stages. Still, it happens right before the top travel period during the Lunar New Year celebrations, increasing the chances of spreading the virus further. The yen went 0.2% higher to 109.96 per dollar today.

Boeing considers borrowing $10 billion

Boeing is in discussions with banks to acquire a credit of more than $10 billion according to people close with the subject, while the company needs to overcome increasing critical expenses arising from two deadly crashes of its 737 Max aircrafts.

Boeing has received more than $6 billion from banks so far, and is talking to other banks for more. The company this month has stopped the production of the problematic planes while the grounding extends beyond a year.