Oil falls as White House pushes for higher OPEC production
Oil prices are on the decline again on Wednesday, following some profit taking a day earlier as it rebounded off its recent lows. Crude prices have fallen heavily this month as delta cases have spread rapidly in numerous countries, triggering concern about a slowdown in the economic recovery.
Today’s sell-off appears to be linked to reports that the White House is planning to push for OPEC and its allies to boost production faster than the current pace of 400,000 barrrels per month. The belief that higher prices are harming the recovery and the current pace isn’t sufficient is behind the push. Whether the group will take those calls on board is another thing.
The oil group is no stranger to the White House trying to interfere in its decision making process, with President Trump a constant critic of them during his term. While the comments earlier appear less confrontational, it’s clear that pressure is going to ramp up. How that will go down in the group is another thing. Some will be more than happy to increase production faster while others may be more reluctant after a prolonged period of very low prices.
The EIA crude inventory release had little impact on oil prices, showing a draw of 447,000 barrels, below expectations and a little short of Tuesday’s API number.
Gold gets reprieve after CPI data
Lower yields and a softer dollar are providing some reprieve or gold which has found its way back towards $1,750. It has fallen a little short at the first time of asking but this test of what was previously a major support level could be key.
It was only a couple of days ago that the yellow metal smashed through here in style, with illiquid conditions early in the Asia session adding some rocket fuel to the breakout. While it did retest $1,750 later that day from below, that may have been more a case of gold just correcting itself after the flash crash. A rebound off the same level today could be further confirmation of that breakout.
That prior support level also falls around the cluster of fib levels – late July high to August lows – so should offer interesting resistance. A rotation off either of these – 38.2, 50, 61.8 – around that prior support could be a very bearish signal.
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