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Commodities Update 9

17/08/2015 | 1 min read

Oil prices weak; Gold prices stabilize/ Morgan Stanley: reaction to Yuan-devaluation may be exaggerated

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The price for a barrel WTI oil decreased about 3%, whereas the price for a barrel Brent Crude oil only decreased about 0.9%. WTI oil now reached a new annual low at USD 41.67 a barrel. On Wednesday morning, the U.S. government announced that crude oil inventories declined 1.7 million barrels. The number of oil rigs on U.S. mainland increased the fourth time in a row, announced the oil services company Baker Hughes Inc.. According to the company this could indicate that U.S energy firms got adjusted to lower prices.

Gold prices rose by about 2% an ounce after the devaluation of the Yuan last week. Silver prices extend their relatively better development in comparison to gold prices. Silver prices rose by 3% an ounce. The gold/ silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, fell by five ounces during the last six weeks. According to the People’s bank of China the fixing of the Yuan will mainly take place according to market forces. The spot rate is currently allowed to trade with a range 2% above and below the official fixing.

According to Morgan Stanley the reaction of the markets towards the devaluation of the Yuan could be exaggerated. The devaluation would have been overdue. The U.S.-Dollar appreciated about a fifth, but the Yuan appreciated 10% against the U.S.-Dollar. This led to cheaper imports without actually increasing them, stated their analysts. They conclude that the devaluation will not lead to a noticeable reduction of the imports either.