Oil dips, gold lower as risk appetite returns

Oil prices fall ahead of NATO meeting

After rallying since the middle of last week, crude prices declined as energy traders await what actions come from this week’s NATO summit.  Crude supply shortage concerns were somewhat alleviated after reports that China is buying Russian crude at a big discount.  It looks like two key economies, China and India are still buying Russian oil and that will likely put a halt to the recent rebound in prices.

The short-term crude demand outlook might need a downgrade soon as China is facing growing pressure from surrounding nations.  The oil market remains very tight and completely fixated over every development with the war in Ukraine. If Europe decides they will move forward with a Russian oil ban, oil prices will skyrocket.  Russian Deputy PM Novak noted that the course of action of a ban could send oil to more than USD 300 a barrel. If it seems likely an EU ban on Russian energy is coming, Brent crude could easily rally to record high territory above the USD 150 level.

Gas

It is worth nothing that the EU is making sure it will be able to have gas stored up for next winter.  The EU has positioned itself to phase out Russian supplies as they’ve made progress with a draft summit statement on purchasing gas, LNG and hydrogen.

Gold

It looked like gold was doing a nice job of not falling apart given the global bond market selloff, but surging stocks completely dampened demand for safe-havens.  Today’s market moves are somewhat surprising, given rising bond yields and the resilience behind equities.  Gold looks like it is on the ropes as surging yields, growing stagflation risks, and nearing a potential pivotal moment in the West’s response in the Ukraine war. Gold should have decent support ahead of the USD 1900 level, but if that breaks, bearish momentum could get ugly fast.  Gold should stabilize soon as this stock market rally should run out of steam.

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.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. 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. Most recently 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 and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya