Oil
Yesterday’s bullish triggers for oil prices were quickly undone today. Oil prices declined after flows from the Druzhba pipeline resumed, and preliminary analysis of the missile that killed two in Poland was likely an errant missile fired by Ukraine’s defense system. It looks like we don’t see an immediate escalation from the Russians, which has tentatively removed some of the short-term supply risks.
Oil struggled for direction after a mixed crude oil inventories report as stockpiles rose while fuel inventories declined. It was a report that wasn’t that surprising as gasoline demand improved, diesel demand weakened, jet fuel demand improved as we approach the holidays, and production was steady,
Oil pared losses after the White House noted that, ultimately, Russia is responsible for the tragic incident in Poland. Russia might not have sent the missile that killed two in Poland, but the rest of the world is on high alert that the war in Ukraine could easily escalate into a massive conflict with NATO.
Gold
Gold is stuck in limbo as the weakening US dollar trade appears ready for a break. The dollar rout is near key technical levels, so gold might be ready to soften a little bit here.
Gold will eventually act like a safe haven, but its primary catalyst is the Fed’s rate hike path, which dictates the dollar's direction. Today’s hawkish round of Fed speak put some pressure on bullion as policymakers push back on traders making calls for a pivot.