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.
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