Oil recovers on EIA draw, gold edges up

Oil reverses losses after surprise EIA draw

Oil came under some pressure early in the day as it continued to struggle around its recent highs, but those losses were short-lived as EIA reported a small drawdown against expectations of a 2.1 million barrel build. This came after API reported a 3.294 million barrel build on Tuesday, so the drawdown very much came against expectations, hence the big rebound.

Of course, this is also a market that is fundamentally bullish so we’re likely to see plenty of dip-buying appetite in moments like these. While there may be headlines here and there that take the heat out of the markets, whether that be weather-related or warnings from world leaders directed at OPEC+, only an increase in output or an easing of energy fears will lead to a substantial pullback. OPEC+ struggling to hit current output targets may not bode well on the first point.

Gold edges higher as USD falls further

Gold is making decent gains again on Wednesday as the dollar continues to come under a little pressure. The greenback has slipped back to its lowest level in three weeks as traders continue to price in tighter monetary policy from central banks around the globe. So much talk in recent months has been around Fed tapering but the focus has been shifting, with the BoE seemingly right at the front in terms of rate hike intentions.

The result is that gold has found itself well supported in a tightening environment when stock markets are performing surprisingly well. Whether that will be sustained in the near term depends on the fate of the dollar, which may have a little further to fall yet. As it approaches 93 and gold pushes USD 1,800, the conversation may get a lot more interesting.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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