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WTI Breaks Below $90, Gold Shining Brightly
www.investing.com/analysis/wti-breaks-below-90-gold-shining-brightly-200628084
WTI Breaks Below $90, Gold Shining Brightly
By Ed Moya | Aug 04, 2022 11:56AM ET The oil market is a mixed bag, as demand destruction is met with limited spare capacity. Ongoing weakness should be unlikely since the oil market remains tight, but the break of the key technical $90 level could unleash some momentum selling. WTI crude should have seen massive support at the $90-a-barrel level, but an intensifying global economic slowdown is changing that oil market in tight trade. WTI crude should see some support at the $88.75 if this breach of the $90 level holds.
Weakening economic data from the UK and Germany kept oil heavy early, but buyers clearly emerged. Oil price weakness should be limited from here, as energy traders know that China’s demand for crude could bounce back any time soon and that the SPR release will end in the fall. If the energy markets remain in doom-and-gloom demand mode, oil could fall another $5, but that should not be the base case.
Earlier, the Saudis raised September prices to record levels for Asia. The increase of Arab light crude was 50 cents, which was less than the $1.50 increase some energy analysts were expecting. The Saudis are keeping the oil market tight and that should eventually provide some support for crude prices.
The resumption of Iran nuclear deal talks will closely be watched to see if negotiators can break the impasse. Energy traders have watched this movie before, and no one will start pricing extra barrels of Iranian crude to hit the market before the end of the year.
Gold Moves Higher
Gold continues to rally as geopolitical tensions won’t be going away any time soon and as central bankers worldwide brace for recessions. The Bank of England had a rather gloomy outlook and the Czech central bank (CNB) surprised markets by halting its rate hiking cycle.
Gold is rallying as Wall Street becomes fixated with a global economic slowdown that will get much worse by year-end.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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WTI Breaks Below $90, Gold Shining Brightly
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