Oil slips back, but upside risks remain
Another volatile day of trade in oil markets saw Brent and WTI falling around 5%. Lower growth forecasts and slower Chinese growth at the end of the first quarter amid lockdowns appeared to have driven the bulk of the move, although it came following a strong four-day rally after the world’s second-largest economy started easing restrictions.
There remained plenty of upside risks to the oil price, even at these levels, which made Tuesday’s large declines all the more interesting. Protests in Libya knocked out around half a million barrels per day of output which contributed to Monday’s rally.
While this was only a temporary hit, it came at a bad time as far as global supply was concerned. As was evidenced by reports of OPEC+ compliance hitting 157% in March, up from 132% in February.
In other words, OPEC+ produced 1.45 million barrels per day less than it promised as part of the deal to gradually return output to pre-pandemic levels.
Profit-taking seen at USD 2,000
Gold prices neared USD 2,000 on Monday, but have since pulled back and were down a little over 1% on Tuesday. This as yields continued to rise, along with the dollar, which may have been limiting the upside in the yellow metal, even as inflation remained a major problem and investors clung on to safe-havens.
Still, while we may have been seeing a corrective move, the recent trend was strong and we may see further runs at USD 2,000 despite initial profit-taking.