Oil's Bearish Case Severely Weakened By Saudi comments
Oil prices are higher again this morning, supported once more by reports that OPEC+ could consider cutting output. While this may simply be a case of Saudi Arabia talking up the price, for now, the prospect of the group taking such action effectively removes two of the biggest downside risks for prices.
An Iran nuclear deal was explicitly referenced so if any deal is announced in the coming weeks, it will be interesting to see what the impact on the price will now be and how quickly OPEC+ reacts. The global slowdown is another factor that has weighed on the price and it seems that could also trigger lower production. With that in mind, there isn’t a huge amount holding the price back now. It seems OPEC+ is determined to see the oil price in triple-figures despite the serious headwinds facing the global economy.
Helping the price higher are reports of another hit to supplies from Kazakhstan via the Caspian Pipeline Consortium (CPC) Black Sea terminal. This isn’t the first time that flows from the country through Russia have been disrupted this year and with the outage set to last at least a month, it’s another unwelcome loss.
European gas prices are rising again today amid ongoing nerves over new maintenance work to Nord Stream 1 next week. The disruption is set to last three days but the fear is that it could become much longer. Freeport LNG has also pushed back its restart date to mid-November which is another blow to the bloc as it tries to wean itself off Russian gas.
Gold Struggling To Recover Amid Strong U.S. Dollar
Gold is already seeing some resistance after a minor recovery on Tuesday. The dollar has soared higher over the last couple of weeks alongside a bump in US yields and gold has been hit as a result. The greenback pared gains yesterday bringing some reprieve for the yellow metal but it didn’t last long and it’s marching higher once more. Whether gold breaks $1,730 or not may well depend on what Jerome Powell has to say later in the week as well as whether traders are in the mood to listen, should he stick to his colleague’s hawkish script.