Oil has recovered earlier losses to trade around 1% higher on the day. Crude could extend its winning run to three sessions if it holds on, recovering from the lows which came on the back of lower global growth expectations and COVID lockdowns in China. Those restrictions could see annual Chinese demand fall for the first time in 20 years in a further sign of the struggles facing the world’s second-largest economy.
While the focus may be on the demand side at the minute, we can’t ignore OPEC+ and its recent warnings about volatile price action and the disconnect with fundamentals. The group sent a warning shot earlier this month and may be tempted to send another prior to the October meeting. The recovery in the price may be supported by that, alongside a broader improvement in risk appetite in the markets and a weaker dollar.
Gold’s Cautious Recovery
Gold is continuing to enjoy a small recovery, albeit one that is not without resistance. Since hitting a bottom earlier this month, it’s been a stuttered rebound in gold which perhaps highlights the hesitance to get behind it in the markets. The dollar has pared gains in recent days which has helped gold to add to those gains but even now it’s seeing strong resistance around $1,730 which was previously a key level of support. We could see it overcome that if the dollar continues to trend lower but that ultimately depends on the US inflation data tomorrow.