Texas Refineries Begin to Reopen

With US markets closed for the Labor day holiday, it was a fairly quiet night overnight. The FTSE 100 and Dax both closed down by around 0.3%. Commodity markets were also quiet although gasoline fell as refineries in Texas began to reopen. Gasoline is still up significantly since before the hurricane struck however. Oil production in the Gulf of Mexico and some hurricane affected on-shore shale production will start to come online too. Tomorrow the US oil inventory data from the American Petroleum Institute will be released before the official Department of Energy data the following day. This will give an idea of the overall effect of the hurricane on production and refining.

Gold prices held onto gains as the precious metal approaches one-year highs following a rally spurred by North Korea’s testing of a nuclear weapon. Gold’s strong performance recently has been largely fuelled by a combination of geo-political tensions and a weak US dollar which makes it cheaper for holders of foreign currencies to buy.

Today the Reserve Bank of Australia (RBA) will make its interest rate decision for the month although all expectations are for no change in rates. The RBA continues to take a cautious approach as the case for either a cut or hike is not strong enough to take action at the moment. It is mostly waiting for inflation to pick up before beginning the rate normalisation process as employment is already showing signs of improvement.

   

Data Releases:

–    Australia Current Account 11:30am AEST

–    Australia Interest Rate Decision 2:30pm AEST

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This article was written by William O’Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.