Oil prices are sliding once more after tumbling on Monday following some woeful Chinese data. The unexpected MLF rate cut from the PBOC may have further spooked traders as it’s unlikely to have any positive impact and just looked a little desperate. Throw in the country’s disappointing refinery data – with output falling to 12.53 million barrels per day – and things aren’t looking particularly good in the world’s second-largest economy.
It’s hard to say how much of a factor the Iran nuclear talks are as a deal looks both close and unlikely depending on who’s talking. It’s possible that with an agreement or not imminent, the potential for a deal is being priced in which creates two-way risk for the oil price if a final announcement does come this week. But the primary driver of the weakness, which could keep prices around $90 or lower is the threat of recession around the world and the Chinese lockdowns.
Positive signs for gold?
There’s been a lot of pushback in gold early this week, with the yellow metal trading in the red for a second day. This comes amid another day of gains for the US dollar even as yields remain relatively flat. The fact that gold isn’t shedding too much of its recent gains could be a positive sign over the medium term, although it would have to overcome what has become a strong barrier of resistance this past week.