Oil prices settled near $71 a barrel following a recent two-day rally. After Mexico’s major outage, the country was set to resume its crude production.
A fire on an oil platform in Mexico preceded a decline in supply by more than 400,000 barrels per day. The state oil firm in Mexico said it is expected to resume production by Aug. 30.
Mark Haefele, chief investment officer at UBS Global Wealth Management said that while volatility looks set to continue, they see further gains for oil as global economic normalisation continues. Moreover, he said that OPEC remains disciplined on crude supplies.
By 1028 GMT, Brent crude added 14 cents, or 0.2%, to $71.19 a barrel, reversing earlier losses. Brent crude prices are anticipated to rise to $75 a barrel by December. U.S. West Texas Intermediate (WTI) crude added 8 cents, or 0.12%, to $67.62.
In the previous two days, both benchmark contracts climbed by about 8%, erasing most of the losses from a seven-day losing streak amid the spreading Delta variant of the coronavirus and the surge in cases of infections.
According to sources, the American Petroleum Institute (API) data showed crude inventories fell1.6 million barrels for the week ended Aug. 20, while gasoline stockpiles fell 1 million barrels.
Gold Down, Focuses on Jackson Hole
In Asia, gold retreated on Wednesday morning as the dollar inched up. Investors looked to the U.S. central bank’s guidance on asset tapering and interest rate hikes.
The Federal Reserve will convene for its Jackson Hole annual symposium, set to take place virtually from Aug. 26 to 28. The focus is now squarely on Fed Chairman Jerome Powell remarks at the event for clues on his timeline for asset tapering.
Some investors say that the Fed will likely begin tapering within 2021. Analysts at Goldman Sachs (NYSE:GS) increased the possibility of talks that asset tapering will begin in November 2021.
By 12:17 AM ET (4:17 AM GMT), gold futures fell 0.67% to $1,796.35. As expected, the U.S currency edged up on Wednesday as the dollar usually moves inversely to gold.
SPDR Gold Trust (P:GLD) said its holdings declined, falling 0.2% to 1,004.63 tons on Tuesday from 1,006.66 tons the day prior.
In other precious metals, silver eased 0.4% to $23.73 per ounce. Platinum and palladium were down 0.5% and 0.6%, respectively.