Oil jumps again after Chinese coal mine closures
Oil prices are rising once again today, up a little over 2%, and hitting fresh highs as the energy crisis continues to drive support for crude. The flooding in China may have given oil an extra lift on Monday but we’re looking at a tight market that OPEC+ is allowing to run hot after a long period of low prices.
It’s hard to see the rally easing up too much as long as OPEC+ continue to take this approach. Of course, if Nord Stream 2 is approved, we could see energy prices correct themselves quite aggressively if last week is anything to go by. But given the political sensitivity around the pipeline, it would be a bold move to rush the decision at this point.
There is still plenty of momentum behind the oil rally and the fundamentals remain extremely favourable. As was reported last week, the energy crisis has already increased crude demand by 500,000 barrels per day and that’s before the weather turns. Will it be a surprise to see oil back in the triple digits later this year? Probably not.
Gold holding strong despite rising yields
Gold hasn’t really gone anywhere this month. In fact, it’s only a couple of dollars above its closing price in September. But it’s been fascinating to follow in that time as traders appear to be struggling to determine exactly what its function is against the backdrop of higher inflation, tighter monetary policy, growing uncertainty and stock market jitters.
Friday’s jobs report appeared to break the deadlock but the rally quickly ran on fumes and the price returned back to where it started. The yellow metal is trading a little higher today but there isn’t a huge amount of momentum behind it. The fact that prices are supported though even as US yields rise is promising for gold and perhaps a sign of its safe-haven properties being favoured once more.