Oil on the move once again
Oil prices are on the ascendency once more, up around 1% on the day, following a brief correction on the back of Putin’s comments on Wednesday that Russia is ready to stabilise the global energy market. A larger than expected inventory build from EIA contributed to the pullback, as did reports that the US is considering drawing on Strategic Petroleum Reserves.
While this provided some temporary reprieve, that’s all it is and WTI is once again eyeing up USD 80 a barrel. It fell just short of this yesterday, as profit-taking kicked in and Putin did the rest. The fact that the rally is back on track already after crude prices were more than 3% down on the day earlier, says a lot about the mood in the markets.
Putin teased us all with the prospect of more gas but we’re going to need more substance if prices are going to ease up for a sustained period of time. We’re not even into the cold months yet; once the weather takes a turn for the worse, price moves could accelerate, in the absence of significant action.
Jobs report to kick-start gold
Traders can’t seem to decide what to do with gold at the moment. Is it a risk asset? A safe haven? An inflation hedge? Is there enough inflation or is it just transitory? Can it really rally as the Fed pares back stimulus? We’re seeing mixed messages, which may have something to do with the debt ceiling debate, which has now resolved itself (until December).
We could just be seeing skittishness ahead of tomorrow’s jobs report, which will likely solidify the Fed’s position on tapering this year. It’s hard to imagine a jobs report that derails a taper unless it triggers a full-blown taper tantrum. Once the jobs report passes, the outlook for gold may become much clearer.
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