Oil slips back but upside risks remain
Another volatile day of trade in oil markets has seen Brent and WTI falling around 5%. Lower growth forecasts and slower Chinese growth at the end of the first quarter amid lockdowns appear to have driven the bulk of the move, although it comes following a strong four-day rally after the world’s second-largest economy started easing restrictions.
There remain plenty of upside risks to the oil price, even at these levels, which makes today’s large declines all the more interesting. Protests in Libya have knocked out around half a million barrels per day of output which contributed to Monday’s rally. While this is only a temporary hit, it comes at a bad time as far as global supply is concerned.
As was evidenced by reports of OPEC+ compliance hitting 157% in March, up from 132% in February. In other words, OPEC+ produced 1.45 million barrels per day less than it promised as part of the deal to gradually return output to pre-pandemic levels.
Profit-taking seen at USD 2,000
Gold prices neared USD 2,000 on Monday but have since pulled back and are down a little over 1% today. This comes as yields continue to rise, along with the dollar, which may be limiting the upside in the yellow metal, even as inflation remains a major problem and investors cling on to safe-havens. Still, while we may be seeing a corrective move, the recent trend has been strong and we may see further runs at USD 2,000 despite initial profit-taking.
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