Oil slides ahead of OPEC+ meeting
Oil prices were down more than 7% at the start of the week, wiping out almost all of last week’s gains, as ceasefire talks and Chinese lockdowns take some of the pressure out of the market. Prices have become very elevated and were susceptible to further spikes as Europe looks to pivot away from Russia and sanctions bite.
The fact that Russia and Ukraine were holding negotiations doesn’t guarantee we’ll see any substantial progress as we’ve seen all too often in recent weeks. But the fact that they were still happening offered hope that we were heading in the right direction and concessions we’ve seen on Ukraine’s side in regard to NATO membership could really help that along. Assuming Russia was truly intent on a deal and leaving Ukraine, of course, which many were skeptical about.
Reports that OPEC+ was likely to stick to the May output increase plan—400,000 barrels per day again—when it meets on Thursday not only did not trigger a paring of losses in crude, but appeared to have contributed to the declines. The move rebounded somewhat, but not entirely.
Gold retains its appeal as it slips at the start of the week
Gold was off around 1% on Monday which was to be expected against the backdrop of improved sentiment and a higher dollar. The yellow metal was likely to remain well supported in the current environment, but has made steady gains in recent sessions and was simply giving a portion of that back. Even so, between talk of inflation, recession risks, and higher commodity prices, I can’t see gold losing its appeal too much any time soon.