Crude prices rebounded after the EIA crude oil inventory report confirmed another significant draw as gasoline demand surged to a record high. The Moya household vacation to Bethany Beach, Delaware happily contributed to the robust demand. Oil bulls did take some caution to the 200,000 bpd rise in US production and lower refinery utilization.
The collapse of the OPEC+ talks has weighed on oil prices this week. The overriding concern is that the current output agreement will be abandoned, and producers will ramp up production to boost market share.
While near-term demand is clearly outpacing supply, the markets are fretting that this will not be the case heading towards the end of the year should the OPEC+ agreement fall apart. Currently, OPEC is retaining supply by around six million barrels a day. The group was looking to lower this to four million, but the United Arab Emirates dissented and no agreement could be reached.
Oil prices have come off too much and that is why weakness didn’t remain the theme despite growing concerns about the spread of the delta COVID variant. International travel will remain depressed, especially considering some of the surges happening globally. WTI crude seems poised to settle around the low USD70s.
The move higher with gold prices has tentatively been exhausted. Gold prices quickly retreated after rallying above USD1,818 as profit-taking triggered a move below the $1,800 level. Most of the headlines on Wall Street support higher gold prices, but a stronger dollar got in the way of today’s rally.
Gold’s short-term outlook is looking rather bullish again now that several parts of the world are grappling with the delta COVID variant and that is downgrading all the global growth forecasts.
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