Oil steady as fresh Shanghai restrictions halt rally
Oil prices are steady on Thursday after surging once more in recent days. Fresh restrictions in Shanghai may be behind the rally losing steam, with China’s Covid-zero strategy the primary downside risk as far as crude is currently concerned. UAE Energy Minister Suhail al-Mazrouei alluded to this when he effectively referred to the reopening in China as being an upside risk for prices given the substantial shortfalls in OPEC+ production targets which currently amount to around 2.6 million barrels per day.
With the EIA warning of further hits to Russian supply over the next 18 months as a result of sanctions and an EU embargo amounting to around 18% of its first-quarter output (or two million barrels) – and that’s not accounting for the impact of the shipping insurance ban – the tightness in the oil market isn’t going to easily improve. Tight refining capacity is also further compounding the problem for consumers now facing record pump prices.
Gold choppy ahead of US inflation
Gold continues to fluctuate around USD 1,850, clearly with one eye on the US inflation data tomorrow and the Fed meeting next week. There isn’t really too much to add considering the price action of recent weeks. The yellow metal has been choppy at times but ultimately hasn’t moved in any considerable way, with USD 1,830 offering support below and USD 1,870 resistance above. Perhaps the CPI data will be the catalyst for the next explosive move.
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