Oil prices are steady
Oil prices eased overnight in the face of a stronger US dollar, a slow news ticker from Eastern Europe, and continuing concerns over China’s growth as the Shanghai lockdown continued. Brent crude fell by 2.15% to USD 104.60 a barrel, with WTI falling 2.45% to USD 101.15 a barrel. With China returning today, it was business as usual with Asia walking in and buying. Brent crude has risen 1.10% to USD 106.70, and WTI has gained 0.80% to USD 101.90 a barrel.
Despite the back and forth markets, oil is range trading this week. The extent of the new Russian sanctions to be announced by Europe and the US today will have a more immediate impact on short-term direction. It is my base case is that Europe will leave Russian oil alone for now, although if they surprise and target this sector, prices should move sharply higher. In the meantime, China’s growth concerns seem to be tempering gains in oil markets.
I expect Brent to remain in a choppy USD 100.00 to USD 120.00 range in coming weeks, with WTI confined to a USD 95.00 to USD 115.00 a barrel range.
Gold’s consolidation continues
In another wax on, wax off session, a stronger US dollar pushed gold 0.48% lower to USD 1923.25 an ounce overnight. In Asia, moribund trading sees it slightly lower to USD 1922.50. Gold remains confined to a narrow but noisy USD 1915.00 to USD 1945.00 an ounce range.
The risks are still skewed to the downside for gold, especially if US yields and the US dollar keep climbing. Only a rally through USD 1970.00 changes that outlook temporarily. Failure of USD 1915.00 an ounce will signal a retest of important support at USD 1880.00.
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