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Oil skyrockets on Russia oil ban talks, gold nearing record levels

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Oil pares huge gains

Crude prices skyrocketed to a 13-year high at the start of the week as energy traders were thinking the war in Ukraine could lead to an even tighter oil market as the US tries to convince the Germans to agree upon a ban of oil imports from Russia. After hitting the USD 137 level, Brent crude oil prices have settled back to the USD 120 region as Germany resists cutting off essential Russian energy supplies.

Oil prices over USD 100 throughout the summer will become a bigger drag on the economy than the market is expecting.  The Biden administration is pinning hopes that some agreements can be made with both Iran and Venezuela that could bring some much-needed supply to the markets. With no breakthrough with Iran nuclear deal talks, oil prices will continue to grind higher.

Gold

After surging to above the USD 2,000 level, gold prices tentatively turned negative as investors become more convinced that European growth won’t completely disappear this year and that stagflation risks have heavily been priced in.  Too much uncertainty with commodity prices and economic growth prospects should keep gold prices supported until investors become optimistic that a negotiated end of the war is in sight.

There is still a lot of optimism that growth prospects won’t crumble completely and that helped trigger some profit-taking after gold prices rallied above the USD 2000 level. Gold prices resumed climbing after Russia-Ukraine talks did not yield a significant result on a truce or ceasefire. Gold prices look poised to form a trading range around the USD 2,000 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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