Oil rallies on outages, gold steady

Oil sees near term support from outages

Oil prices are 1% higher again on Tuesday, adding to Monday’s strong gains which came following a flurry of bullish news for crude.

Trump’s return from hospital was generally supportive of risk appetite and gave oil a kick higher, while strikes at six Norwegian offshore oil and gas fields has hit output by around 330,000 barrels of oil evuivalent per day, or 8% of total production.

It’s been an intense hurricane season already and we’re now well into the greek alphabet with eight weeks still to go. Hurricane Delta is rapidly intensifying as it enters the Gulf and oil companies are already beginning offshore evacuations in the region that accounts for 17% of US crude oil production.

WTI is approaching $40 again and while near-term risks seems tilted to the upside, they will pass and the prices could quickly tumble once again.

Gold still looks bearish, despite recent recovery

Gold is pretty flat today but holding above $1,900 which bulls will be encouraged by.

While I’m a longer term bull, I’m far from enthused. The rally is really struggling to gather momentum and while a close above $1,900 was a promising sign, I’m not yet sold. I think some more near-term downside may be on the cards and the reluctance we’re seeing in the recovery rally isn’t changing my view on this.

We’ve seen some paring back but I feel we’re poised for some risk aversion in the coming weeks and right now, that doesn’t favour gold.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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 BNN. 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