Oil edges higher ahead of inventory data
Oil prices have been levelling off the last couple of days after enjoying a strong rebound from last Monday’s sell-off. There hasn’t really been much development on this front since the start of the week. Oil, like other risk assets, has been in wait-and-see mode, something that will likely change in the coming hours and days.
The API inventory data may jolt crude prices back into life a little ahead of the close on Wall Street. Investors brushed aside last weeks surprise inventory build, from both API and EIA, and instead focused on the strong fuel demand. EIA is expected to report a 3.4 million draw on Wednesday, a number that could be a nice boost for oil prices ahead of big earnings reports after the close.
Gold continues to consolidate ahead of the Fed
There isn’t too much to add on gold that hasn’t already been written over the last week. The start of the Fed’s blackout period ahead of the meeting appears to have coincided with the yellow metal consolidating around USD 1,800 with ever-narrower ranges.
We are seeing some minor gains today, with gold slightly back above USD 1,800 as US yields edge lower but this is nothing more than pre-meeting positioning. The view appears to be that Powell and his colleagues will err on the dovish side and put off any hard decisions until the latest wave has passed and the environment looks a lot clearer.
This makes a lot of sense when you consider that the central bank has previously viewed the inflation numbers as transitory and the country is currently embarking on another wave of infections. But as always, the wording will be crucial and could get investors excited or running for the exits. Just another day in the life of the Federal Reserve.
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