Oil pares losses but facing major challenges
Oil prices have steadied in recent days but remain under pressure as we head into a troubling period for the global economies, with Covid cases expected to surge.
OPEC+ lowered its demand forecasts for this year and next on Monday, an acknowledgement of the ongoing challenges facing oil suppliers around the globe as prices slipped below $40 a barrel.
Oil demand for this year is expected to fall 9.46 million barrels a day, versus previous forecasts of 9.06 million last month, with the group also acknowledging the new working habits weighing on demand for transportation fuel.
Risks remain tilted to the downside, which should make the monitoring committee’s recommendations on Thursday interesting. They’ve only just pared back cuts, can a partial reversal really be on the cards?
$2,000 gold hangs on the Fed
Gold is edging higher as we close in on Wednesday’s Fed meeting.
The decision to amend its framework last month has people seemingly convinced that we’re going to hear something that will push rates lower, hit the dollar and be the catalyst for gold’s run at $2,000.
This is a perfectly reasonable assumption with it being the first meeting since the announcement but I just wonder whether the rebound we’ve seen in inflation over the last couple of months may affect its desire to make bold promises.
It’s going to be an interesting one and with the dollar momentum showing signs of shifting, I do wonder whether it’s poised for a surge in the event that the Fed underdelivers. This would be bad news for the yellow metal.
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