Oil – edges lower with one less reason to rally
Oil has opened the week on the back foot thanks to reports that the container vessel blocking the Suez Canal is starting to move. After six days wedged across one of the world’s most important trading routes, efforts to dislodge the ship are finally bearing fruit: bad news for the oil bulls. The unblocking of the Suez Canal gives oil one less reason to rally.
Oil prices have been on a rollercoaster ride across the previous week as the market weighed up the blockage against concerns over future demand as Covid cases rise in Europe, India and parts of South America.
While we are unlikely to see a repeat of last week’s wild swings, volatility is expected to remain as Thursday’s OPEC meeting moves into focus. The broad expectation is that the OPEC+ group will keep output cuts in place, which is underpinning the price of oil at around USD60.00.
Gold trades within a familiar range ahead of NFP
The precious metal trades under pressure as it battles US dollar strength, and the softer risk tone in the market is failing to lift gold. At the end of last week, gold managed to edge higher as the US dollar experienced profit-taking around the four-month high. However, the lack of follow-through buying means that the precious metal remains within a familiar range.
The outlook for gold remains bearish. With the US accelerating the vaccination programme and the approval of the country’s stimulus package, optimism surrounding the US economic recovery has picked up significantly, boosting the greenback. There is little in the way of market-moving data today to drive the precious metal, with broader risk sentiment the key factor and US dollar price dynamics. Traders are likely to hold off from placing any aggressive bets ahead of Friday’s non-farm payroll report, so gold could remain relatively range-bound across the week.
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