China and US discuss release of oil reserves
A potential coordinated effort between the world’s two largest economies to release crude reserves sent oil prices lower. The Biden administration asked China to release oil reserves and it appears Beijing is considering it.
Despite a mostly bullish EIA crude oil inventory report, crude prices are drifting lower. A surprise draw of 2.1 million barrels, a dip in production, and steady gasoline demand was unable to trigger a substantial recovery in prices. The 2.1 million barrel draw countered last night’s API data of 655,000 build and today’s consensus estimate of a 1.2 million increase.
Inflationary pressures are heating up everywhere and that has some investors nervous about the short-term growth outlook which could also translate to softer crude demand.
If the US and China are unable to reach a quick agreement on a coordinated reserve release, WTI crude should quickly recover to the USD 80 level. A formal announcement could trigger further selling momentum for WTI crude that targets the USD 74 area.
Gold
Gold prices got a boost from hot inflation data from Europe and as the Fed sticks to the wait-and-see approach on whether they are wrong about inflation being transitory. UK inflation has now been above the BOE target for a third straight month and has hit the highest annual pace since 2011. Eurozone inflation was confirmed at 4.1%, a 13-year high that still has yet to faze the ECB.
Gold may consolidate here a little while longer before making a run towards the USD 1900 level.
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Ed Moya
His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.
Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.
Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.
Ed holds a BA in Economics from Rutgers University.
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