A cautious recovery
Oil prices are continuing to recover after popping higher at the start of the week. There’s been a broad improvement in risk appetite at the start of the week thanks to a weekend without drama in the banks. That’s enabled stocks to bounce back and yields to creep higher on stronger economic prospects which, in turn, is lifting crude prices.
The rally on Monday was further supported by a halt to exports from Iraq’s Kurdistan region which knocked around 450,000 barrels per day offline. There’s no timeline for an agreement to be reached to restart flows and the tighter the oil market becomes, the greater the loss it will be. For now, it’s contributed to a small rise in the price, with Brent now trading around the lows of the months that preceded the min-banking crisis.
Eyeing the highs?
Gold is treading water so far today after pulling back strongly again at the start of the week. Risk appetite has improved and yields are rising so naturally, gold is giving back some of the banking panic gains it accumulated over the last few weeks. Even so, it isn’t trading too far from $2,000, seemingly a major psychological obstacle, and it’s well off its recent lows.
That still suggests, along with moves elsewhere, that investors either don’t think the mini-banking crisis is behind us or, perhaps more likely, that scarring from it in credit markets has permanently reduced the tightening required from central banks. That could be bullish, if so, for gold and traders may even have one eye on the all-time highs if rate cuts this year become a reality.
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