Oil plunges again as imbalance risks ease
Oil prices fell heavily again on Tuesday, taking total losses since the start of the week to more than 10%. Of course, that was largely a reflection of just how far they rose since the invasion, with Brent now more than 25% from its highs just over a week ago. The talks between Ukraine and Russia weren’t just lifting market sentiment, they were, at the time, alleviating some of the worst fears around commodity supply disruptions.
Further compounding the declines were shutdowns across China which could continue to ramp up as case numbers spike. China is a huge oil consumer so this dent in demand could temporarily ease some of the imbalances in the market. More significant in the longer term was the Iran nuclear deal which appeared to be making progress. Granted, at a snail’s pace, but that’s better than not at all. It seemed sanction complications may be overcome which will move us a step closer to a deal and around 1.3 million barrels per day coming back onto the market.
Gold continues lower as commodities slide
Gold continued to fall on Tuesday, off more than 1%, as risk appetite continued to improve and commodity prices ease. It ran into some support around USD 1,915, but the next test could come around USD 1,900. That said, over the last year or so USD 1,880 has looked a more significant area of support and resistance.
While progress in recent days has seen gold give up substantial gains—at time of writing, 7.5% off its highs—it will quickly come back into favor if negotiations take a turn for the worse or sanctions targeting energy would be intensified.