Oil softens but major correction unlikely
Oil prices are softening a little again today, as they continue to struggle around the USD 90 level. This comes even as OPEC+ refused to be pressured into raising output faster in March – or perhaps be forced to do something they’re unable to do right now. The group stood by previous commitments on Wednesday which leaves us to wonder just how much they will actually manage to deliver this time.
The steady approach didn’t generate any fresh optimism for crude, despite rumours beforehand that we could see a larger increase in March, amid political pressure. Instead, we seem to be seeing a little profit-taking. I don’t think this makes USD 100 oil any less likely, or that we’ll see any significant correction, but we may see it lose some momentum in the near term and even pull back a little.
Gold suffers as more tightening is priced in
Gold appears to have fallen back into consolidation and is even a little lower today after paring some of last week’s losses in the early part of the week. Central banks upping their game is not favourable for the yellow metal and we are now seeing that across the board, from the Fed maybe raising interest rates five times, to the BoE perhaps doing similar and even the ECB joining to a much lesser degree. All are coming around to the market view that inflation is here for a while and it needs addressing.
The yellow metal has slipped back below USD 1,800 on more hawkish expectations for the BoE and ECB, despite the moves weakening the dollar. It’s almost 1% lower on the day and appears to be struggling after breaking that psychological support level. The next test below is USD 1,780, with a break of this potentially seeing attention shift further back to USD 1,760, around the late 2021 lows.
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