Mar 22, 2014, 02.27 PM | Source: CNBC-TV18
David Lennox of Fat Prophets believes that stabilization witnessed in the WTI after some volatility was due to the Chinese data.
David Lennox (more)
Analyst, Fat Prophets | Capital Expertise: Commodities
He also believes that stabilization witnessed in the WTI after some volatility was due to the Chinese data.
Below is the verbatim transcript of the interview:
Q: What is the sense you are getting about gold, do you think this USD 1,350 per ounce has been conquered and it goes on to USD 1,400 per ounce from hereon?
A: Certainly we think that when the Crimean situation started escalating to dissension part of events, we did see gold prices being sold as a safe haven and that pushed the price of gold upwards. Unfortunately, we didn’t see Janet Yellen come out and suggest that QE taperings would continue and then she also suggest that for some time in 2015, we would see interest rates rise in US. Unfortunately, that put a bit of a spiral under the gold price and we saw a drop back to now where it is trading around about the USD 1,330 per ounce level.
A speculate event has come out of the markets now and we think that gold will probably start to range trade somewhere between this USD 1,350 per ounce to USD 1,300 per ounce region before perhaps rallying into the end of the year up to USD 1,400 per ounce.
Q: What about crude because it has been a fourth weekly loss for Brent now and sitting at around USD 107 per barrel. Is it just a seasonal slump in demand that we are seeing or do you see some other triggers that could take Brent lower in the near-term?
A: Brent prices probably reacted fairly well to a lot of the news that we have seen circulating through the channels. We saw both Brent and crude come off when the Chinese export data came out and showed a significant drop a couple of weeks ago and that did spook the market about global growth and sent both the Brent and the WTI prices lower. Those prices have now stabilized somewhat. WTI especially, because we have seen crude inventories in the US rising.
In fact, when you have a look at what is happening in the wholesale area in the US, we are still seeing wholesale or the finished product in the US actually still been drawn down. So that has kept the WTI price from probably collecting to a lot lower levels and where it is at the moment.
Brent on the other hand, hasn’t got that same picture. There is a little bit of pressure in Libya, we are not quite sure if they are exporting or they are not, so that is keeping that pressure on Brent price. Going forward, we will see both WTI and Brent if we are right with global growth starting to pick up and the US especially we could see that process start to rise a little towards the end of this year.