Oil pares losses after Powell testimony
Oil volatility will remain elevated now that opposing opinions are emerging on where prices will finish the year. Oil prices are under pressure as global recession fears accelerated crude demand destruction calls. Inflation and growth concerns won’t be improving anytime soon and that has all the short-term drivers turning negative for the crude demand outlook.
Citigroup’s Morse is expecting oil to fall to the USD 80s by the fourth quarter, while Goldman’s Currie is sticking to his supercycle call for oil, noting that it has the potential to get tight over the next three to six months.
Fed Chair Powell’s testimony to Congress is keeping the inflationary focus for financial markets and will keep traders expecting more rate hikes as they try to tame inflation. Crude pared losses as risk appetite returned following Fed Chair Powell’s testimony.
Gold
Gold prices steadied as doom and gloom has taken over Wall Street. Fed Chair Powell’s testimony was a reiteration of the Fed’s commitment to bring down inflation with aggressive rate hikes that may send the economy into a recession. All the economic data is starting to show a weakening economy that will drive up demand for safe-havens.
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