Weekly Oil Report: US Government Bonds Riding The Market

Last week was surprisingly unexpected for markets. WTI oil increased up to $63, and gold fell to about $1717. However, traders expected a resurge for oil price around $57. Let’s discuss some of the possible reasons for the contrast and the situation in the first week of March.

In recent week, the US government bonds long term yield was sharply increasing. The rise indicates that the market presumes the dark shadow of pandemic and related economic tensions are over. Considering the recent US financial reports, the economy is recovering, and The Federal Reserve policies were successful.

In case we get to see more growth in bonds 10 years yield, the possibility of higher interest rate increases. With a higher interest rate, the stock market goes under pressure, and people can lose interest in investing in stocks for a while. Hence, gold can touch lower prices and oil ride higher.

However, if the yield of the long-term bonds stays lower, the market does not expect the interest rate to rise soon.

The new US relief package is also determining for financial markets. If authorities approve it, it can be a good driver for the stocks. Currently, the dollar value is increasing, but when the new package finds the way to American households, it will decrease again.

In last week market, Brent could even touch $66.32 and WTI hit $63.38. As reported by Infinity Galaxy, oil seems to be bullish for higher prices in the first week of March. It moved strongly, and We cannot expect the WTI to get bearish until it can touch prices below $59-58. Until then, we may see $65 WTI and $70 Brent oil. The upcoming week can be determining for commodities and stocks.