Oil eases back from yearly highs
Oil prices are easing lower after strong gains across the previous week. Optimism surrounding the demand outlook as Western economies relax lockdown restriction sent oil prices skyrocketing last week, hitting a fresh yearly high on Monday before edging back.
Data from China showed a 14.6% year-on-year decline in crude oil imports in May, taking the edge off the recent rally, although the bullish trend remains intact. Global oil demand is expected to outstrip supply across the coming six months despite OPEC+ easing oil production cuts, which is underpinning the price. In the Asian session, Brent crude dipped 0.20% and WTI edged 0.15% lower. With some improvement in the Covid situation in India and the recovery in the US, China and Europe remaining on track, oil should remain a buy on dips, with no warning signs coming from the technical momentum indicators.
Indirect talks between Iran and the US regarding the revival of the 2015 nuclear deal appear to be a slow burner. The two sides will enter the fifth round of talks in Vienna this week. Should a deal be agreed upon, sanctions on Iran’s oil exports could be lifted. However, any changes are likely to be gradual.
Gold declines on Yellen’s comments
Gold is extending losses from the previous week, failing to build on Friday’s gains as it flirts with USD1,880 – the intraday low. On Friday, the precious metal rebounded firmly from USD1,856, a two-week low, on the weak US non-farm payroll report. The market considered that the weaker jobs data could take the pressure off the Fed to taper support. However, gold bears are back in control after US Treasury Secretary Janet Yellen’s comments over the weekend revived tapering expectations, lifting yields. The tussling on Capitol Hill over Biden’s USD1.7 trillion infrastructure spend could also influence gold prices, although the CPI print will be the key driver this week.
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