Oil Pares Losses Ahead Of Next Week’s OPEC+ Meeting
Oil prices are recovering following the sell-off over the last couple of sessions. The prospect of a deeper economic slowdown, perhaps even global recession, has naturally turned traders more bearish on the oil price as demand would naturally slump in those circumstances relative to prior expectations.
Of course, there is another side to that equation, supply. The message from OPEC+ earlier this month was quite clear; it stands ready to adjust supply if fundamentals change or volatility continues, and prices no longer reflect the situation. While it has so far resisted the urge to hold an unscheduled meeting, the next showdown is next week, so we should soon have a more updated view in light of everything we’ve seen recently.
In the meantime, we could see further pressure on oil prices if economic woes continue to dominate and traders want to test the alliance's resolve in the face of severe global economic risk. Amid inflation and the cost-of-living crisis, you have to wonder why the group would want to keep prices artificially high in the short term, as it will only make a global recession all the more likely.
Gold Bounces Back, Downside Risks Persist
Gold is rebounding after another terrible start to the week that saw it plunge back to $1,620, its lowest level since April 2020. It goes from bad to worse for the yellow metal as traders flock to the greenback, and yields keep rising. The question for gold traders is how close we are to peak rate pricing and inflation. The same question is being asked in all corners of the markets, and so far, no one has the answer.
With that in mind, building a bullish case for gold is hard. Once we see signs of hitting that peak, we could see a recovery amid continued demand for safe havens. In terms of levels, it’s hard to say where that will come. The first test to the upside now is $1,640, followed by $1,650 and $1,680, but there still could be further pain ahead, with $1,600 being the next obvious test.
What’s Driving The Recovery In Bitcoin?
Bitcoin is staging a remarkable recovery amid a mild reprieve elsewhere on Tuesday which will no doubt excite a crypto crowd after another rough period. Turmoil elsewhere appears to have lifted bitcoin, which has largely traded as a high-risk asset.
This will undoubtedly stoke conversations about its role in the new economy, perhaps even reignite claims of its safe haven status. Naturally, I’m far from convinced, but it’s certainly intriguing to watch unfold given the chaos we see elsewhere.