Oil prices dip with eye on OPEC, gold higher after debt ceiling deal

How much sway does Saudi Arabia still have?

Oil prices are slipping on Tuesday as traders weigh up the prospects of another OPEC+ cut this weekend. Russia’s Novak last week appeared to play down the prospect of another reduction shortly after traders were warned to “watch out” by the Saudi energy minister, who hinted at another “ouching” for short-sellers.

It seems Novak’s words have carried more weight in the markets as traders determined that no alignment of thought will mean no deal. That may prove a little naive given the sway that Saudi Arabia holds. With prices not far from their March and May lows, we may soon see just how influential the Saudis still are.

Gold buoyed by debt ceiling agreement

Gold is almost 1% higher today, buoyed by a decline in US yields as Biden and McCarthy reached a deal to avoid a default. That deal still has a few hurdles to overcome over the next few days but this is a hugely significant step that should ensure that the unthinkable doesn’t happen.

The trend remains against gold though as traders fret about the resilience of the labour markets and the stickiness of inflation. The jobs report on Friday is the next big test on that front and given what we’ve seen until now, it may take something particularly weak to convince Fed policymakers not to hike again in June.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.