Oil Prices Continue Rally; Gold Prices Slip

Oil prices increased on Wednesday on reports that US officials encouraged all countries to stop Iranian crude imports from November. Conversely, gold prices decreased and remained near an over-six-month low as the greenback firmed in the apparently easing trade tension.

Crude Oil West Texas Intermediate Futures for delivery in August traded at $70.82, or 0.40 percent higher. Brent Oil Futures for delivery in September, traded in London, were 0.29 percent at $76.36 per barrel.

Shanghai Crude Oil WTI Futures for delivery in September were higher 3.23 percent at 483.10 yuan per barrel.

The US has instructed countries to cut all imports of Iranian oil starting from November, according to a senior State Department official said on Tuesday.

“Oil prices were flying higher overnight after catching an updraft from the US administration calling for allies to cut Iran imports to zero tolerance,” stated Stephen Innes, who is the head of trading for Asia-Pacific at OANDA, a futures brokerage.

He also cautioned that “Libya will continue to be a significant point of concern in the oil supply chain.”

Khalifa Haftar, who is the Eastern Libyan commander, announced on Monday that his army has given control of oil installations to a separate National Oil Corporation (NOC) located in the eastern part of the country.

Haftar said that the official state-owned oil company located in the capital Tripoli, which is also called NOC, will no longer be allowed to handle oil.

Meanwhile, the American Petroleum Institute on Tuesday recorded a 9.2 million barrel reduction in US crude inventories in the week to June 22 to 421.4 million barrels.

The Organization of Petroleum Exporting Countries (OPEC) has come up with a deal last week to increase output after a key meeting held in Vienna. Even if the decision has already been widely expected, the supply boost was lower than what investors have anticipated.

Gold Prices Drop due to Stronger Dollar

Amid the rally on oil prices, gold showed weakness as the dollar stood firmer.

Gold futures for delivery in August on the Comex division of the New York Mercantile Exchange lost 0.26 percent to $1,256.60 per troy ounce.

US President Donald Trump indicated during a meeting with lawmakers that the White House may pivot to foreign investment reviews under the Committee on Foreign Investment in the United States rather than imposing new limits of Chinese investment in US technology.

“We have the greatest technology in the world, people copy it and they steal it, but we have the great scientists, we have the great brains, and we have to protect that,” said Trump. “And that can be done through CFIUS, we have a lot of things we can do it through.”

The US dollar index, which tracks the greenback’s strength against a basket of six other major currencies, was at 94.32 on Wednesday morning. The index dropped to a low point of 93.94 on Mondays due to concerns over intensifying trade tensions between the United States and its trade partners, though a slight easing in the tensions made risk appetite a trifle higher.

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