Oil supported by a cyber attack on key pipeline
Oil is trading higher, extending gains from the previous week amid continued efforts to restore production following a cyber attack on a top US pipeline. The attack happened on Friday, and efforts to get operations back up and running as quickly as possible are in full swing.
The pipeline in question provides nearly half of the East Coast supply, so the attack has understandably rattled the markets. The quicker operations can be restored, the less impact this event will have. However, with no solid timeline in place as to how long it will take to normalise operations, the price of oil is likely to remain well supported.
The disruption comes as the US continues to reopen its economy, boosting the demand outlook. However, a Covid outbreak in Australia has led to new restrictions being imposed. Elsewhere, Indian Prime Minister Narendra Modi is under mounting pressure to impose a nationwide lockdown as Covid cases remain elevated in India, the world’s third-largest importer of oil.
Gold extends gains
Gold is building on last week’s impressive gains and hovers around a three-month top. The yellow metal surged 3.5% across the previous week in its best weekly performance in five months after sharply below-consensus jobs data. The shockingly weak non-farm payroll report validates the Fed’s dovish stance, and fears they will taper support earlier now appear unfounded in light of the weak jobs report.
The data offered just the confirmation gold bulls were looking for, cementing the idea that interest rates will stay low for longer, which is good news for non-yielding gold. Lower interest rates reduce the opportunity cost of holding the non-yielding precious metal.
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