Financial markets soared on Friday after Fed Chairman Ben Bernanke's speech in the Jackson Hole Symposium. Although the Chairman did not state whether QE3 will be announced in September, his speech was dovish enough to indicate that further easing would be implemented later in the year. Throughout the week, strength in crude oil prices reduced. Indeed both WTI and Brent crude retreated after previous rallies. Impacts of Hurricane Isaac on oil facilities in the Gulf of Mexico were limited while the US retained the option to release oil form the SPR in case of emergency. These upstaged news that Iran reiterated its stance that the Middle East country would continue its nuclear activities. Gold moved within a range for most of the time last week, only to resume the recent rally after Bernanke's statement on Friday. The upward momentum would need to be sustained by announcements (or speculations) of further quantitative easing measures as physical demand remained rather sluggish.

The theme of this year's Jackson Hole is "Monetary Policy Since the Crisis". Regarding this, Chairman Ben Bernanke stated that "the hurdle for using nontraditional policies should be higher than for traditional policies. At the same time, the costs of nontraditional policies, when considered carefully, appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant", While investors concerned that recent improvement in economic data would delay additional easing, Bernanke stated that "notwithstanding these positive signs, the economic situation is obviously far from satisfactory". The entire speech indicated that Bernanke is still in favor of further unconventional policies.


Crude Oil: Friday's rally saved crude oil prices and led the front-month WTI and Brent contract to gain +0.33% and +0.86% respectively. Hurricane Isaac passed the Gulf of Mexico but no reports of actual damage have yet been recorded. However, the market should remain cautious on near-term oil supply as a large number of domestic production facilities have been shutdown on voluntary basis. Moreover, an explosion occurred in Venezuela's Amuay oil refinery which is responsible for output of 645K bpd. It remains skeptical although the government said that the refinery will be restarted a few days later.

Natural Gas: Nymex natural gas price gained +3.595 last week. According to the DOE/EIA, natural gas storage increased 66 bcf to 3 374 bcf in the week ended August 24. Stocks were +429 bcf higher than the same period last year and +361 bcf above the 5-year average of 3 013 bcf. Separately, Baker Hughes reported that the number of gas rigs fell -13 units to 473 in the week ended August 30. Oil rigs gained +11 units to 1 419 and miscellaneous rigs dipped -2 unit to 2 and the total number of rigs was down -4 units to 1 894 units. Directionally oriented combined oil, gas, and miscellaneous rigs slipped -1 units to 219 units while horizontal rigs decreased-10 units to 1 149 and vertical rigs gained +7 units to 526 during the week.

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Precious Metals: Gold gained +0.89% while silver added +2.50% last week. Recently, precious metals were lifted amid speculations that the Fed and the ECB would implement further unconventional measures soon. In coming weeks, gold's strength would continue to be dependent on QE3 speculations as physical demand would remain sluggish. Despite the festive season, demand for gold in India remained lackluster as prices remained at high level. Moreover, while monsoon rains recovered last week, harvest is still severely affected by the drought this year. This has greatly lowered purchasing power of people in India.

PGMs fell last week as news reported that some mine worked returned to work in South Africa. Indeed, labor actions in the mines have far from ended. Although Lonmin and government officials met on Wednesday to negotiate a possible resolution, no agreement has been made. Yet, it's hard for platinum prices to break resistance further as the relatively weak demand outlook would keep the noble metal in surplus this year.