Oil slides after Libya ceasefire, Gold clinging on

Oil sliding as Libya ramps up production and Covid dampens demand

Oil prices have pulled back from their range highs in recent sessions, where they had traded despite the significant amount of downside risk.

Some of that risk is now coming into play and weighing heavily on crude, with WTI slipping back below 40 and heading back towards the lower end of its post-summer range.

Libyan production has been rapidly increasing, hitting 500,000 barrels per day last week from less than 100,000 during the blockade. Friday’s ceasefire announcement has piled more pressure on oil prices and combined with the rising Covid numbers, is a massive blow on both the supply and demand side, as far as prices are concerned.

A move below the post-summer lows may alert the attention of OPEC+ and force a rethink of January’s two million barrel increase in output.

Gold clinging on for now

The great gold consolidation continues, with price holding up relatively well this morning and clinging onto support, despite broader market sentiment turning negative and the dollar making decent gains.

This hasn’t been the best combination for gold prices this year but they are showing some resilience in early trade. The yellow metal is finding some support in the $1,890-1,900 region, with resistance forming around $1,930.

The walls are continuing to close in but that may remain the case for the next week or so, unless the confirmed collapse of stimulus talks – whenever that comes – tips it over the edge and stops get wiped out. That could make for an interesting move, with the path of least resistance seemingly below.

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
Craig Erlam

Latest posts by Craig Erlam (see all)