Oil falls, but uptrend remains
Oil is heading lower for a second straight session as investors question the strength of the demand outlook. Data yesterday revealed that Chinese oil imports declined by 14.6% in May compared to a year earlier, representing a five-month low. The unexpectedly low import data confirms weakness in the Asian market.
Despite the pullback in the price, the longer-term bull trend remains intact, and the technical picture is upbeat for now. Expectations of strong global demand in the second half of the year have helped oil prices surge more than 40% so far in 2021. OPEC+ has also supported prices this year by extending production cuts.
OPEC+ reiterated its intention to add a combined two million barrels per day from July. However, their next move remains a mystery because the group has not commented on what will happen after July so far. It appears that OPEC+ will stay in control, with US oil producers still practising restraint after the pandemic blow.
Looking ahead, API crude stockpile data will be in focus later today after a larger-than-expected draw in the previous week.
Gold eases after two-day rally
Gold prices are stalling after a strong two-day rally, which saw the precious metal gain 1.5% across Friday and Monday. Follow-through buying from Friday’s Goldilocks jobs report boosted the precious metal to USD1,900 overnight. The NFP read of 559 thousand was solid but missed the consensus of 650 thousand.
Little has changed for gold in terms of fundamental drivers on Tuesday. Inflation and the Fed’s next move continue to be the key drivers for the precious metal.
US CPI is due on Thursday and is unquestionably the central focus for gold this week, so much so that the precious metal is likely to remain relatively range-bound between USD1,880-USD1,900 ahead of the release.
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