No need to meet for OPEC+, gold shimmies

Oil outlook brighter

Crude prices are holding onto gains after OPEC+ agrees to skip Wednesday’s planned ministerial meeting.  Despite the crude demand hit from India and Japan, the outlook has dramatically improved across Europe and provided an opportunity to stick to the three-month gradual increase plan made four weeks ago.  Energy markets were not completely surprised with the decision to skip this week’s meeting given the Ramadan holiday.  The next meeting is expected to be on May 28th.

Complicating the outlook for crude has been the disappointing news over the past month with both the J&J and AstraZeneca COVID vaccines.  Today’s news that J&J’s COVID-19 vaccine has now been linked to two new cases of blood clots brings the total number of cases to 17 from around 8.1 million doses.  The investigations are ongoing and initial reactions are that they will unlikely change the CDC backing of the J&J vaccination.

It was a busy day on the energy front after incremental updates on Iran’s nuclear talks and with Russian companies contemplating stopping supplies to Belarus’s Naftan Refinery following US sanctions.

WTI crude appears content to stay in its tight trading range and might have to wait for a broader move with risk appetite.

Gold

Right now, gold prices only care about the Fed.  Gold is stuck despite US consumer confidence hitting a pandemic high, home prices jumping the most since 2006, and as other commodity prices surge.  Gold’s next move could higher and break above the USD1,800 level if Fed Chair Powell’s upgraded outlook does not trigger a bond market selloff.  Powell could very well stick to the inflation will be transitory script and that might be enough to get gold bulls excited.  Wall Street has heavily priced in high inflation, so if Powell pushes back that could be enough to let gold take off.

Leading up to the FOMC decision, gold will likely continue to consolidate between the USD1770 and USD1790 range.

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.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya