IEA offers a bleak outlook for crude
Oil prices are relatively flat on Thursday, after once again edging lower earlier in the session. Crude has been paring gains in recent days after a huge run higher over the previous month but prices are still extremely high. Risks remain tilted to the upside even as recession risks take some of the heat out of the market.
The good news just keeps coming in the oil market, with the IEA reporting today that it expects record global oil demand next year paired with supply struggling to keep pace as Russia is forced to shut in more wells and other producers are constrained by capacity. In other words, the market will remain extremely tight and prices high. A recession may ridiculously be the only hope for balance in the market and lower prices. Although refining capacity won’t even hit pre-Covid levels next year which will continue to boost prices at the pump.
Gold recovery may not have legs
A volatile week in gold has seen it break through the bottom of the recent range only to recover a little around USD 1,800. A stronger dollar remains a major headwind for the yellow metal and in these conditions, it’s hard to imagine it falling out of favour. Yields are continuing to rise and central banks are hiking aggressively in a desperate attempt to rein in inflation. It doesn’t bode well for gold even in these risk-averse markets.
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