Oil edges higher as Tropical Storm Ida moves towards the Gulf
Oil prices are rising after a brief dip on Thursday, up around 1.5% on the day. A 10% rebound earlier this week saw Brent break back above USD 70 and WTI may not be far behind. It’s run into some resistance around USD 69 already, with the USD 69-70 zone being a key pivot point for WTI in recent months.
Crude prices remain well off their summer highs so there’s still room to run, even accounting for the less promising outlook in the near term as a result of the delta surge across various countries.
We may also be seeing prices rising in anticipation of Tropical Storm Ida reaching the Gulf on Friday before making landfall as a category three hurricane. The risk of the intensity increasing ahead of making landfall may be supporting prices into the end of the week. Various companies have been removing workers from offshore facilities in anticipation of the storm.
The OPEC+ meeting next week will be one to watch, with prices once again elevated and following suggestions from the White House recently that the group should be increasing production faster. While the group won’t bow to pressure from the White House, some members may agree with the US which could make for interesting discussions.
Gold pares gains ahead of Powell
Gold failed to hold onto earlier gains but continues to trade close to USD 1,800 ahead of Powell’s Jackson Hole speech. Like most things this week, that’s what it all boils down to. Eagerly anticipating events to come and position accordingly. Softening data and rising delta risks have given gold a new lease of life.
Should Powell keep his cards close to his chest on tapering and even open the door to standing pat in September as a result of the Covid data, gold could break sustainably above USD 1,800 and even set its sights on the highs around USD 1,833, maybe even beyond.
A taper hint on the other hand could spell trouble for gold’s revival and see it once again fall out of favour, with USD 1,760 becoming the key level of interest in this scenario.
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