Oil quickly loses momentum despite output curbs
Oil prices are rising again today after giving back all of Monday’s early gains and more as the session progressed. Buoyed by the news of Saudi Arabia extending its voluntary one million barrel output cut by a month to August, alongside Russia cutting exports by 500,000 in the same month, Brent crude rallied more than 1% and looked on course to increase its winning streak to four sessions but that’s not how it turned out.
Now prices are rising again but remain shy of yesterday’s peak, and if it falls short today, then doubts may grow around its ability to take the next step and even break above its recent trading range. That range has consolidated over the last couple of months but not to any significant degree that suggests a breakout is imminent, with prices recently fluctuating between $72 and $77.
A big hurdle to overcome for gold
The gold recovery is continuing into a fourth day, although so far, it hasn’t been particularly inspiring. We’ve seen a modest rebound since the yellow metal slipped below $1,900, and nothing has really improved fundamentally that would warrant anymore. Central banks are still desperately trying to gather any evidence that inflation is on a sustainable path back to target and falling short.
The price has moved back towards a region that was a key area of support in May and early June, and this could represent the first big test of the recovery. A move above the $1,930-$1,940 zone could be a bullish signal, at least in the short term, at which point $1,960, $1,980, and $2,000 could come back into focus. But that’s a big hurdle to overcome first.