Crude oil prices surged after EU outlined plans on phasing Russian oil and following the FOMC decision that signaled Wall Street has passed peak hawkishness. The oil market will remain tight going forward and now that a peak in the dollar is in place crude prices should have extra support here.
The latest EIA crude oil inventory report posted a surprise build but energy traders fixated over the strategic petroleum reserves falling to the lowest levels in over two decades. US production remained steady at 11.9 million barrels a day, which suggests producers are not rushing to increase output as rig counts have steadily been rising.
The focus will shift to OPEC+ and that is likely to be an easy meeting that keeps the gradual increase output strategy in place.
Gold
Gold prices are embracing the FOMC decision that suggests Wall Street has passed peak hawkishness. Fed Chair Powell removed the risk of 75 basis point rate increase at the June meeting and suggested that hikes could come down to 25 basis points once inflation comes down.
Gold got its groove back as a firm top has been put in for the dollar. Even if inflation continues to run hot, investors will take comfort from Fed Chair Powell’s words and that should be good news for gold investors. Gold may find tentative resistance at the $1900 level, but momentum traders might pounce if price action breaks through over the next day.