Oil prices were steady on Thursday following two days of gains after a call from the United States, the world’s top oil consumer, for major producers to boost output reinforced supply concerns as economies ease their coronavirus restrictions.
They were also boosted by a pullback in U.S. dollar, which can send speculative investors into greenback-denominated assets like commodities. [USD/]
Brent crude futures edged higher by 8 cents, or 0.1%, to $71.52 a barrel by 0502 GMT while U.S. West Texas Intermediate (WTI) crude futures gained by 5 cents to $69.30.
“Oil prices rebounded for a third day as President Joe Biden’s infrastructure plan boosted reflation hopes, underpinning the energy demand outlook,” said Margaret Yang, a strategist at DailyFX.
The U.S. Senate late on Tuesday passed a $1 trillion infrastructure bill that will expand transportation systems and likely lead to a number of energy-consuming constructon projects.
Gold wavered after its biggest gain in three months as moderating U.S. inflation clouded the outlook for when the Federal Reserve may start easing stimulus.
Consumer prices in the U.S. climbed at a slower pace last month than in June, according to data released on Wednesday. That triggered a move higher for gold as concerns about the Fed’s urgency to pull back on monetary stimulus softened, though prices are still lower this week after a flash crash on Monday.
Kansas City Fed President Esther George said it’s time to dial back tight monetary policy as labor markets improve. That adds to a steady drumbeat of commentary from officials that point toward the central bank readying to ease its massive bond-buying program.
The global economic recovery has piled pressure on bullion this year as investors prepare for the ultra-easy policies of the pandemic era to be reined in. Gold is also inversely tracking the dollar, with August losses for the precious metal mirrored in the greenback’s gains.
Spot gold was down 0.1% at $1,749.99 an ounce by 11:29 a.m. Shanghai time, after rising 1.3% Wednesday. Silver, platinum and palladium all fell.
The dollar held near a four-month peak against major peers on Thursday after retreating overnight as a cooling in consumer inflation tempered bets for an earlier tightening of U.S. monetary policy.
The dollar index, which measures the greenback against a basket of six rivals, was little changed at 92.881, following a 0.19% decline from Wednesday, when it rose as high as 93.195, a level not seen since April 1.
“Further slippage in coming days (for the dollar is) likely, but it’s unlikely to develop into anything meaningful,” Westpac strategists wrote in a client note.
The dollar index “should continue to find support in the 91.5-92.0 area” and “could see new highs beyond 93.50,” when taper talk gathers momentum later this quarter, they wrote.
The euro was little changed at $1.17435 after retreating from a four-month low of $1.1706 on Wednesday, which brought it just two tenths of a cent from the weakest level since early November.
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