Oil surges as OPEC+ sticks to output targets
Oil prices are spiking once again, with Brent crude smashing through 80 dollars for the first time in almost three years. The move came as OPEC+ agreed to maintain output increases at 400,000 barrels per day, each month, despite high oil prices and a surge in demand for crude as a result of the global energy crisis.
Saudi Aramco claimed daily demand had increased by around 500,000 barrels as the natural gas shortage forces countries to seek out alternative sources. It always seemed unlikely that the group would take any other decision going into an uncertain winter in the northern hemisphere when Covid surges could result in further restrictions and weigh on demand.
It appeared to be a relatively short meeting as well, which suggests there wasn’t much disagreement. Of course, this may change over the coming months if oil prices continue to surge and the energy crisis morphs into something far worse. Especially if countries refrain from imposing restrictions and demand isn’t hit.
Gold a safe haven once more?
Gold appears to be benefiting from its traditional safe-haven appeal, with the yellow metal making decent gains on the day, although it has given a portion back already. It hasn’t always been that way over the last couple of years, with the dollar performing well in times of risk-aversion, which has weighed on gold prices.
Perhaps the prospect of higher inflation is pushing traders back to gold, although it’s still very early to say that with any confidence. Whatever has changed for gold, it’s now enjoying a third day of gains and is holding above USD 1,760 which was the next barrier of resistance. The next test will come around USD 1,786, the peak from a couple of weeks ago.
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