Oil slides after OPEC+ meeting
Crude prices tumbled after energy traders saw both the smallest increase in OPEC+ history and as gasoline demand plunged in the US. It looks like OPEC+ is resisting calls to boost output because the crude demand outlook continues to get slashed. The world is battling the ongoing global energy crisis and it won’t be getting any help from OPEC+.
The weekly EIA crude oil inventory was very bearish. A headline build of 4.46 million bpd and plunging gasoline demand sent oil prices sharply lower. The demand outlook might be much worse than everyone was thinking as US gasoline demand fell 7.1%, despite lower prices and this still being peak summer vacationing time.
The oil market will remain tight over the short-term and that means we should still have limited downside here. Crude prices should find strong support around the USD 90 level and eventually will rebound towards the USD 100 barrel level even as the global economic slowdown accelerates.
Gold prices are softening as risk appetite returns after strong US economic data and earnings. The primary driver for gold will be Wall Street’s assessment of how many more massive rate hikes that Fed has left until they enter a period of keeping policy steady. It looks like the chances of a 75 basis-point rate increase at the September FOMC meeting are very much on the table and that might keep the dollar supported, which should make it hard for gold to rally above the USD 1800 level for now.
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