Nothing slowing down oil’s rally, gold rallies

Oil rallies on tight market

Crude prices are rallying despite a small inventory build as energy traders see no end in sight as to how tight the oil market will remain. ​ Oil has been on a tear and growing fears of economic weakness have yet to slow down the rally with prices. ​ The EIA reported a build of ​ 2 million barrels for the week to June 3rd, analysts expected a draw of 2.3 million barrels. ​ Refiners are processing at levels not seen before the pandemic, which suggests the short-term crude demand outlook remains very robust. US production refuses to grow and remained steady at 11.9 million barrels. ​

The bearish parts of the EIA report was the small build, a plunge in crude exports, and as jet fuel demand remains elusive of pre-pandemic levels. ​ ​ ​

With the oil market remaining very tight, energy traders are just waiting for a catalyst for oil to retest the March highs. ​

Gold

Gold prices are rallying as investor demand grows for safe-havens as stubbornly high inflation continues to lead to global growth concerns. The big question for gold is how will prices react to a few more months of hot inflation reports. ​ Wall Street is not quite done pricing in Fed tightening, so higher Treasury yields and a stronger dollar could keep gold in a range. ​

If inflation does not come in scorching hot at the end of the week, gold could break out above its USD 1830 to USD 1880 trading range.

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