Saudi Arabia has no appetite for lower oil prices
Oil prices are rising again on Tuesday, building on the recovery at the start of the week following output warnings from Saudi Arabia. Considering what we’ve seen in oil markets this year, the repeated inability of producers to hit output targets and the record profits of oil companies, it’s quite staggering that the largest member of the OPEC+ alliance is even considering cutting production to address the falling price.
It begs the question; even if a nuclear deal is reached between the US and Iran, how much of a positive impact will it actually have if OPEC+ will pare back production in order to prop up the price? It seems any hope of sub-$90 oil for a prolonged period of time is out of the window and producers won’t be happy unless it’s closer to, or above, $100.
One eye on Jackson Hole
Gold is marginally higher but still struggling to generate any upward momentum, after being crushed by a stronger dollar and higher US yields. The yellow metal flirted with $1,800 briefly earlier this month but it’s been one-way traffic since. It appears to have stabilised around $1,730, marking a 61.8% retracement of the July lows to August highs, which could now be an interesting test. It could be an interesting rotation point if it can get a helping hand from Powell later in the week while a break may suggest a run at $1,680 is more likely.
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