Optimism flows through oil and gold markets

Oil jumps on improved risk appetite and Norway lost output

The optimism is spreading to commodity markets, where oil is up around 4% on the day, partially reversing last week’s large declines.

Also giving a boost to crude prices is a drop in output in Norway, where workers are striking over pay, reducing production by around 330,000 barrels equivalent per day. The strike covers six offshore oil and gas fields and affects around 8% of production.

It comes at a good time for oil prices, given how quickly Libya has ramped up output so even if temporary, it will take some of the heat off crude. Still, the outlook remains challenging and OPEC+ may need to step up again if they’re going to support prices around the $40 mark.

Gold continues to struggle around $1,900

Gold is also enjoying a positive day, with the price moving back above $1,900 having ended last week marginally below.

The rally continues to look weak, with the yellow metal struggling to gather any real upward momentum. Even if it does make a few more gains above $1,900, I won’t get too excited as there are plenty of downside risks for risky assets in the coming weeks and at a time when the dollar is a preferred haven, that includes gold.

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam