Commodities and Cryptos: Oil price volatility, Gold slightly higher, Bitcoin eases ahead of SEC ETF decision

Oil

Oil price volatility remains elevated as investors await to see how the global energy crisis unfolds.  A cold winter would mean the oil deficit will only get worse.  WTI crude tentatively fell below the $80 level on reports that Iran nuclear negotiations could begin as soon as this week.  The oil market has put Iran on the backburner, but given the brewing energy crisis, Iran’s ability to ramp up production could easily save Europe if it has a cold winter. Both sides have added motivation since the talks stalled in June.  If progress is made after several weeks of talks, a revival or the Iran nuclear deal could immediately bring Brent back towards the mid-$70s. 

Crude prices turned positive after reports that Mexico’s Tula refinery has been offline since late September over protests.  The focus over the next 24 hours will be on US stockpiles, which have been increasing. A surprise draw could easily send WTI crude back above the $82 level.

Gold

Gold prices rallied as Treasury yields declined after a wrath of Fed speak and the NY Fed survey suggest inflation pressures remain intense but won’t lead to an immediate rate liftoff. Gold is also seeing some safe-haven flows from elevated Chinese risks. Beijing is not done with their crackdowns, further weakness in the property sector is expected, and tensions will increase as the world’s two largest economies resume trade talks.

Wall Street is nervous that this earnings season will completely fuel fears that inflation will threaten the global economic recovery.  Gold’s best environment is to see steady safe-haven flows on modest growth concerns.  A new global financial crisis spurred by inflation would lead to panic selling and not be positive for bullion.  Gold will likely consolidate ahead of tomorrow’s inflation data should pricing pressures remain elevated.     

Bitcoin

Bitcoin’s run towards record territory is taking a breather.  Cryptocurrency headlines continue to be mostly bullish and support the idea that the entire space could still see tremendous growth.  Easing regulatory fears, an expected Bitcoin ETF approval from the SEC have been the bullish catalysts while brewing pressure to address the massive amount of energy consumed to process mining will likely become a headwind.  

Bitcoin’s reaction to the SEC decision over an ETF will be key in the short-term and likely lead to an extended consolidation until the potential October 18^th deadline.  

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