Oil extends gains on improving demand outlook
Oil is bounding higher, extending gains for a fourth straight day, supported by OPEC’s upgraded demand outlook and as we await further news on the Colonial Pipeline disruption. The pipeline was aiming to have output level back to normal by the end of the week. However, there is a sense it is taking longer to ramp up than anticipated, with gasoline shortages being reported along the East Coast.
OPEC’s latest demand outlook continues to point to a strong recovery in global demand in 2021. Strong economic growth in China and the US is expected to drive demand higher, overshadowing the Covid crisis in India, the world’s third-largest importer of oil.
API data revealed another draw on US crude stockpiles, this time by 2.5 million barrels, just slightly shy of expectations. This came after an eight million barrel draw the week before. Attention will turn to today’s EIA data for confirmation of the fall in inventories.
Gold awaits CPI to gauge Fed’s next move
Gold is slipping lower after a solid run-up over the fortnight. The precious metal has gained more than 3.5% so far in May, supported by a weaker US dollar, disastrous US jobs data and the market taking the Fed at its word. The Fed has offered continual reassurance that it’s not looking to tighter policy sooner than anticipated and that the US economy was still in need of support. The huge miss on the US non-farm payroll validated the Fed’s stance.
Today the US dollar has strengthened slightly, which is dragging on US-dollar-denominated gold. All eyes will be on today’s inflation data in order to gauge where the Fed could go from here. A higher-than-expected reading could see bets rise that the Fed will consider tightening monetary policy earlier than anticipated, which could drag non-yielding gold back towards USD1800.
For a look at all of today’s economic events, please check out our economic calendar at www.marketpulse.com/economic-events/ 
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.