Saudi Arabia has no appetite for lower oil prices
Oil prices are rising again on Tuesday, building on the recovery at the start of the week following output warnings from Saudi Arabia. Considering what we’ve seen in oil markets this year, the repeated inability of producers to hit output targets and the record profits of oil companies, it’s quite staggering that the largest member of the OPEC+ alliance is even considering cutting production to address the falling price.
It begs the question; even if a nuclear deal is reached between the US and Iran, how much of a positive impact will it actually have if OPEC+ will pare back production in order to prop up the price? It seems any hope of sub-$90 oil for a prolonged period of time is out of the window and producers won’t be happy unless it’s closer to, or above, $100.
One eye on Jackson Hole
Gold is marginally higher but still struggling to generate any upward momentum, after being crushed by a stronger dollar and higher US yields. The yellow metal flirted with $1,800 briefly earlier this month but it’s been one-way traffic since. It appears to have stabilised around $1,730, marking a 61.8% retracement of the July lows to August highs, which could now be an interesting test. It could be an interesting rotation point if it can get a helping hand from Powell later in the week while a break may suggest a run at $1,680 is more likely.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.
His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.
Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
