What are the factors that are influencing crude oil prices? is gold the best investment in the coming period?Posted on Thursday, November 21 2019 at 5:36 pm GMT+0000
What are the factors that are influencing crude oil prices?
In fact, technically we cannot expect anything new. The markets beacame more than fimiliar with OPEC and its allies output reduction, and are now concerned in the trade woes and their impact on the global and Chinese demand for oil on one hand, and the US production of shale oil on the other hand.
Production cut agreements impacts lasted from late 2016 to 2018.This year, markets are now influenced by developments on the trade front as they directly affect the demand for hydrocarbons. If the US and China failed to reach an agreement consumer costs will increase, growth will weaken as well as industrial production, and thus demand for Oil will decrease and vice versa.
The sustained growth of US shale oil production is also weighing on oil prices and despite the current OPEC and its allies output cap, no significant rallies unless US production decrease. Therefore, I expect prices to remain locked in between the 50 and 63 levels in the coming months.
Gold: the best investment in the coming period
The recent pullback haven’t change the gold’s outlook. The developing uptrend is still intact. This week, gold found support at the 1445$ level and neagtive momentum eased as trade tensions between the US and China escalated again.
Thus, as trade tensions persist, central bank adopting expansionary policies by cutting interest rates and announcing fiscal stimulus packages, and with bond yields worlwide remainig low, gold will remain the best investment for the years to come.
The average annual return on gold is about 10% but I expect to see even higher rates in the coming years.