Oil prices touched their highest levels since 2014 on Tuesday due to a global supply glut and strong demand from the U.S. The commodity has seen a steady price increase in the past month, from September 27, when WTI crude was trading at $75.45 per barrel, until yesterday, when it touched above $86 per barrel. U.S. WTI was trading at $83.46 per barrel as of 8:52 a.m. GMT on Wednesday, a retreat from Tuesday's highs thanks to a rise in stockpiles. Crude oil inventories increased by 2.3 million barrels last week, more than the expected increase of 1.9 million barrels. This was the fifth consecutive weekly rise in oil stockpiles, according to the American Petroleum Institute (API).
Some analysts, including Edward Moya from OANDA, see oil hitting over $90 per barrel before retreating, or before OPEC and its allies are pressured into taking action by increasing production. Demand for oil is expected to continue rising in the near term, as global travel increases due to the recent decline in COVID-19 cases worldwide, and the upcoming Christmas holiday season. Oil demands also increase during the winter as more people heat their homes.
Gold Prices Also Ease
Gold prices eased by 0.33 percent in Europe's early trading hours on Wednesday, bringing the price down to $1,787.50 per ounce. The downward move brings the precious metal further away from the key $1,800 mark. The decline came as traders abandoned safe-haven assets like gold thanks to a strengthened U.S. dollar and higher bond yields.
Gold price are down over 1 percent from a one-month high hit last week. Traders are now waiting news from the European Central Bank and the Bank of Japan, both of which are expected to make policy announcements on Thursday. The BOJ is largely expected to continue its significant stimulus program and to cut its inflation forecast, in a divergence from most other central banks who are clearly looking to end their easy money policies.
In Australia, the Aussie dollar spiked on Wednesday thanks to unexpectedly strong inflation data which increased the likelihood of an impending interest rate hike. The RBA could potentially tighten monetary policy earlier than it expected in order to keep up with its strong inflation rates.