Oil choppy amid OPEC+ rumours
The battle between the economic outlook and OPEC+ continues in the oil market, with prices boosted by reports of discussions between producers around an output cut ahead of the meeting next week. This shouldn’t come as a huge surprise under the circumstances as the alliance has previously alluded to its willingness to cut further if fundamentals change.
The question is whether they’ll take the leap given the enormous uncertainty in the economic outlook at this point. Or whether they’ll opt for another, slightly more forceful, warning to the markets to not get carried away speculatively pushing prices lower. Brent and WTI have been trading at pre-invasion levels recently, something the group may not be comfortable with. With Russia reportedly backing a one million barrel per day cut, a substantial option will at least be on the table which could push prices back to late summer levels.
Gold recovers to trade a little higher
Gold managed a small recovery on Wednesday as US yields pared recent gains and the dollar eased off its highs. It may have been overly optimistic to hope that would continue in the current environment although after slipping earlier it has recovered to trade flat on the day. While we could see some upside in the near-term as the dust settles, I don’t think policymakers are in the mood to soften the hawkish rhetoric and the data doesn’t yet support such a move. That could maintain pressure on the yellow metal for now.
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