Gold prices steadied below their highest level in about a year early on Thursday, as markets braced for the latest meeting of the European Central Bank
Oil dips on fears Hurricane Irma could hit crude shipments, rising Libya output – Oil prices dipped on Thursday over fears that Hurricane Irma in the Caribbean could interrupt crude shipments in and out of the United States, and as Libyan output began to recover from disruptions. However, prices received some support from rising demand in the United States, where Gulf Coast refineries are restarting in the wake of Hurricane Harvey that hit the region less than two weeks ago. U.S. Gulf Coast facilities were slowly recovering from the devastating effects of Harvey, which hammered Louisiana and Texas almost two weeks ago, shutting key infrastructure in the heart of the U.S. oil and natural gas industry. As of Wednesday, about 3.8 million barrels of daily refining capacity, or about 20 percent, was shut in, although a number of the refineries, as well as petroleum handling ports, were in the process of restarting. ANZ bank said on Thursday that U.S. crude prices should receive some support “as U.S. refineries increase their oil demand as they recover from recent flooding”. While Harvey’s effects were slowly fading, the massive Hurricane Irma hit Caribbean islands overnight with wind speeds up to 185 miles per hour (295 km/h) and was heading for Florida, where fuel shortages were reported as gas stations struggled to keep up with demand from customers filling tanks ahead of the storm’s landfall, expected this weekend. Another Atlantic storm, named Jose, is following on Irma’s heels and has been upgraded to hurricane strength by the U.S. National Hurricane Centre. Yet another hurricane, Katia, is developing in the Gulf of Mexico.
Gold treads water as markets brace for ECB decision- Gold prices steadied below their highest level in about a year early on Thursday, as markets braced for the latest meeting of the European Central Bank for fresh clues on when it will start to shift away from its ultra-easy policy. The European Central Bank’s latest interest rate decision is due at 1145GMT (7:45AM ET), with no major policy changes expected. Most of the focus will be on President Mario Draghi’s press conference 45 minutes after the announcement, as investors look for more clues on when and how the ECB could start unwinding its massive quantitative easing program. Announcing new staff forecasts, policymakers will likely upgrade the ECB’s growth outlook and reduce inflation projections but only slightly. Having already expressed concern about the rise of the euro in July, policymakers may also repeat their warning about the currency moving too quick. Market experts believe the central bank is likely to wait until October before announcing a tapering of its €60 billion of monthly asset purchases. The yellow metal snapped a three-day win streak to finish lower on Wednesday after U.S. President Donald Trump and congressional leaders unexpectedly agreed to raise the government debt limit until December. If Congress passes the package, which also includes relief funding for Hurricane Harvey, it would prevent a default on the federal debt. The positive development was seen as eliminating the near-term risk of a government shutdown. A lack of substantial developments on the Korean Peninsula also likely contributed to an improvement in risk sentiment in markets, dampening the appeal of safe-haven assets.
Hurricane Irma Hit on Florida Will Drive Down Demand – Natural gas futures rebounded on Wednesday to close higher as investors squared positions ahead of Thursday’s U.S. Energy Information Administration’s weekly storage report. Traders also monitored Hurricane Irma as it headed toward Florida, where it is expected to make landfall over the week-end. The exact location of this event is still unknown at this time. October Natural Gas futures settled at $3.000, up $0.028 or +0.94%. Last week, flooding from Hurricane Harvey in the Houston, Texas area had an impact on production. If the storm hits Florida and causes catastrophic damage as expected then demand will be affected. Floridians will be using less air-conditioning since massive electrical power outages are widely expected. This will lead to lower demand for natural gas from the power plants. Nationwide, demand is expected to be down because of the end of the summer cooling season.
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