Oil slumps ahead of OPEC+, gold dips

Oil slides ahead of OPEC+ meeting

Oil prices are down more than 7% at the start of the week, wiping out almost all of last week’s gains, as ceasefire talks and Chinese lockdowns take some of the pressure out of the market. Prices have become very elevated and are susceptible to further spikes as Europe looks to pivot away from Russia and sanctions bite.

The fact that Russia and Ukraine are holding negotiations doesn’t guarantee we’ll see any substantial progress as we’ve seen all too often in recent weeks. But the fact that they’re still happening offers hope that we’re heading in the right direction and concessions we’ve seen on Ukraine’s side in regard to NATO membership could really help that along. Assuming Russia is truly intent on a deal and leaving Ukraine, of course, which many are sceptical about.

Reports that OPEC+ is likely to stick to the May output increase plan – 400,000 barrels per day again – when it meets on Thursday have not only not triggered a paring of losses in crude but appear to have contributed to the declines. The move has rebounded somewhat but not entirely.

Gold retains its appeal as it slips at the start of the week

Gold is off around 1% on Monday which is to be expected against the backdrop of improved sentiment and a higher dollar. The yellow metal is likely to remain well supported in the current environment but has made steady gains in recent sessions and is simply giving a portion of that back. Even so, between talk of inflation, recession risks, and higher commodity prices, I can’t see gold losing its appeal too much any time soon.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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