WTI trades around $74.50 after paring gains, downside seems limited due to supply concerns
- WTI retreats from five-month high of $74.40, which was marked on Friday.
- Israel warned of a missile and drone attack from Iran following Israel's attack on Iranian sites.
- Iran withdrew from the sixth round of talks with the United States following Israel’s attack.
West Texas Intermediate (WTI) Oil price pared its daily gains after reaching a five-month high of $74.40, currently trading around $71.80 per barrel during European hours on Friday. Crude Oil prices surged due to rising concerns regarding supply disruptions. The escalating tensions in the Middle East threaten to disrupt the Strait of Hormuz, a key route for about 20% of global Oil transportation.
Israel expects a missile and drone attack from Iran following Israel's preemptive attack on dozens of Iranian sites to dismantle its nuclear program, noted by Israeli Minister of Defense, Israel Katz. Kats also declared a special state of emergency in the country, per Axios.
Moreover, White House Secretary of State Marco Rubio released a statement that “Tonight, Israel took unilateral action against Iran. We are not involved in strikes against Iran, and our top priority is protecting American forces in the region.” “Let me be clear: Iran should not target US interests or personnel,” Rubio added.
In response to the Israeli attack, Iran pulled out of the sixth round of talks between the United States (US) and Iran scheduled for Sunday, Iran International cited Aladdin Boroujerdi, a member of parliament’s National Security and Foreign Policy Commission.
Moreover, the US Energy Information Administration (EIA) released Crude Oil Stocks Change, showing a decline of 3.6 million barrels in the previous week, exceeding forecasts of a 2 million-barrel decline. The decline in Oil inventories signals strong demand.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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