CN: Oil Bounces Back as Investors Focus on Bright Spots, Gold Stays Up as Safe Haven
Oil is bouncing back up in early morning trade as traders focused on news pointing to economic growth worldwide, rather than on concerns about Europe's sovereign debt. Also, the White House's decision to extend the moratorium on offshore drilling following BP plc ( BP )'s oil spill in the Gulf of Mexico is seen as another factor pushing up energy prices.
Gold too is on the rise based on its status as a safe haven from the prevailing long-term risks. There are concerns that the financial overhaul in the United States, as well as coordinated U.S. and European efforts to regulate financial markets will weigh down on trading, increasing the yellow metal's allure.
At 0755 ET, Brent crude is up 1.2% at $75.53 a barrel, while light sweet crude is up 0.8% at $75.17 a barrel, and natural gas is up 0.5% at $4.31 a million British thermal units.
Gold is up 0.1% at $1,213.30 an ounce, while silver is up 0.4% at $18.54 an ounce, and copper is flat at $3.16 a pound.
On the corporate front, Royal Dutch Shell plc ( RSDA ) will be buying privately held East Resources Inc. for $4.7 billion in cash to bolster its holdings of U.S. shale gas deposits. The deal will bolster Shell's daily North American gas output by 7.5% and give it access to a part of the Marcellus Shale.
Meanwhile, President Obama will be heading to the Gulf of Mexico later in the day to see first-hand the environmental disaster which has been described as one of the worst, if not the worst, in U.S. history. BP's latest estimate for the disaster is $930 million, up from $760 million on Monday.
In the mining sector, Perseus Mining Ltd. ( PRU ) said it will start producing gold as its central Ashanti project in Ghana next year. Gold reserves at the project currently stand at 2.1 million ounces, but the figure is seen to be revised up as resources are proved up to reserve status.
As for speculation that Australia's mining tax for 2011 could be made less stringent, BHP Billiton Ltd ( BHP )'s CEO Marius Kloppers has contradicted government claims that a deal on the resources tax is being worked on as he declared that negotiations have hit a stalemate. The plan is to impose a 40% tax on mining profits, but there have been talks that the level at which is it implemented could be reduced.
