Oil flat but risks remain to the upside
It’s been another volatile week of trade in oil but Brent and WTI are set to end it roughly where they started. They’re seeing small gains on the day but price action remains very choppy. There are just so many forces at play at the minute and the increased economic gloom this week and Chinese reopening progress has only added to that.
The risks remain tilted to the upside though given the Chinese reopening and continued efforts towards a Russian oil embargo by the EU. And the data this week from OPEC+ was once again disappointing, to say the least. Unless the economy substantially falters immediately, there isn’t much of a bearish case for crude currently. Not in any significant way, anyway.
Gold buoyed by recession fears
The second half of the week has been kind to gold as the trepidation in financial markets has shifted slightly from the pace of monetary tightening to recession risks. So rather than higher yields and a stronger dollar weighing on the yellow metal, we’ve seen investors pouring into safe havens which have lowered yields slightly and lifted gold.
Whether that will be sustained in this hiking environment will be interesting and ultimately depend on just how real and significant the economic fears are. At the end of the day, rate hikes should lower demand but so should a recession. If the latter continues to be viewed as a likely outcome of the former, gold could see its fortunes improve further.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
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