Oil falls on SPR, gold down on retail sales

Oil slips further after SPR talks

Oil prices have come under fresh pressure over the last 24 hours following reports of talks between the US, China and others regarding a possible coordinated SPR release. Such a move would be a massive statement and would certainly have more teeth than the previous threats from the White House, which is why it’s weighing heavier on the oil market.

And coming at a time when OPEC+ is already suggesting that the market will soon go into surplus, which appears to align with the thinking of the IEA, it may be the case that the market is already primed for a correction and the SPR reports are adding fuel to it. Whether they deliver on threats is another thing. By the look of things, they won’t need to.

Brent is holding above USD 80 at the moment, after briefly dipping below earlier in the day. A more significant break could signal a move back into the mid-70s for Brent, last seen in September.

Gold remains supported for now

Gold remains well supported but it’s lost a lot of momentum this week. The yellow metal took a heavy blow from the US retail sales report on Tuesday and is struggling to fully recover. The report came at a time when the rally was already running on fumes and probably exacerbated any profit-taking that was already happening.

We could see a bit of a correction after such a strong run if US data continues to impress or Fed policymakers talk up the prospect of earlier rate hikes. But as long as real yields remain at their lows, gold will remain attractive.

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

Latest posts by Craig Erlam (see all)