Oil Rises On EIA Surplus
Crude oil prices rose after the EIA report posted a surprisingly large draw. US stockpiles plunged by 7.1 million barrels last week, much more than consensus estimate draw of 100K barrels. It looks like the global demand crude outlook is improving as global recession fears. This oil market is still very tight and since there is limited spare capacity and expectations of a revival of the Iran nuclear deal are dwindling, it looks like oil needs to head higher. It was a bullish EIA report as US crude exports rose to a record as Europe scrambles for alternatives to Russian oil.
Gold
Gold prices are steadying ahead of the FOMC minutes. Gold’s selloff might be overdone as prices are not crumbling despite a surge in global bond yields. UK inflation hit a 40-year high and US retail sales confirms the economy is still holding up, which could pave the way for more aggressive rate hikes by the Fed.
Gold is now comfortably below the $1800 level and vulnerable to further selling if market participants become convinced a couple more aggressive rate hikes could be in the cards. Gold will likely trade in a range for the rest of the summer as the Fed will likely maintain a data-dependent stance with the Minutes and at next week’s Jackson Hole Symposium.