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Oil rebounds, gold shines

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 Oil prices rise on Saudi Arabia increase

Crude prices pared earlier gains after constant posturing by the Biden administration that shows they are getting closer to tapping the Strategic Petroleum Reserve.  In the morning, Energy Secretary Granholm noted that Biden wants to see added supply of oil and that an announcement could be made this week.  In the afternoon, White House Principal Deputy Secretary noted that the White House continues to monitor energy prices.

Earlier oil prices were boosted after Saudi Arabia delivered a significant increase to Arab light grade of crude for Asian customers.  For Saudi Arabia to deliver such an increase, the demand outlook must be improving, somewhat contradicting the uncertainty to the outlook they touted last week.

It is hard to be overly bullish crude prices in the short-term until after the Biden administration intervenes. If the administration taps the SPR, WTI crude should find support around the USD 76.63 area.

WTI crude got an added boost after the DOE reported the SPR declined by 3.14 million bbl last week, the largest drop since July 2017.

Gold

Gold is breaking out as investors scramble for inflation hedges. Fed and BOE rate hike expectations remain influx as investors await the next round of inflation data. Gold is having a good start to the week after President Biden finally got a big win with infrastructure spending and as real yields in the UK fall to record lows. The UK 10-year yield fell to a fresh record low and the 30-year dropped below 1% for the first time since the summer.

If this week’s inflation data does not disrupt the gold rally, bullish momentum could eye the USD 1900 level.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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