Oil’s wild ride, gold finds a bottom

Oil goes on rollercoaster ride

Oil prices went on a rollercoaster as energy traders watched President Putin escalate the war in Ukraine and as the EIA report signals some crude demand weakness. ​

The EIA crude oil inventory report was a lot to process, but it really didn’t deliver that many surprises: Production remains steady at 12.1 million b/d, which is impressive considering oil rig counts have been declining, Imports from Canada are roaring back and that should help restore stockpiles, Jet fuel demand is rather soft despite solid TSA passenger throughput data, and the Strategic Petroleum Reserve steadily draws down. ​

WTI crude seems to have solid support at the $80 level and even as the Fed seems positioned to deliver a hard landing, the oil market should still remain tight over the short-term. ​ ​ ​ ​ ​

Gold

Gold is breathing a sigh of relief as Fed funds futures are gaining confidence that the Fed will be cutting rates during the latter half of next year. ​ The hawkish Fed projections are a rather grim outlook for the economy and that could eventually trigger a resumption of a safe-haven role for gold. ​ The Fed acknowledged that we’re at the very lowest levels of what is restrictive and that they are prepared to soften this labor market. ​ This inflation fight is going to get ugly for the economy, but right now it seems the Fed will be done hiking in February.

Gold will remain vulnerable to selling pressure if inflation does not continue to ease, but it could start to stabilize now. ​ ​

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