Commodities and Cryptos: Oil weakens on Iranian supply prospects, Gold higher, Bitcoin rally exhausted

Oil

Crude prices are ping ponging back and forth as energy traders remain focused on the fallout from Russia’s invasion of Ukraine and as Iran inches closer to a nuclear deal.  In early trade, WTI crude rallied to the highest levels since 2008, after the Russian military captured the Ukrainian city of Kherson. Expectations for another round of Russia-Ukraine talks led to some hope that a possible ceasefire could be agreed upon but talks seem to have been pushed into the beginning of next week. 

Iran could secure a nuclear deal this month and that means the 80 million barrels of oil in storage could hit the market fairly soon. Iran’s energy minister noted that Iranian production could hit maximum capacity in one or two months after a nuclear agreement is reached.  Iran nuclear talks are entering the final stage and that should put a short-term cap with the recent rally in oil prices. 

Oil price weakness extended after White House Press Secretary said, “We don’t have a strategic interest in reducing the global supply of energy, and that would raise prices at the gas pump for the American people.”  It looks like the Biden Administration won’t be banning Russian oil anytime soon and that might suggest we could see some exhaustion in the crude price rally. 

Gold

Gold prices remain supported on safe-haven flows as the Ukraine-Russia conflict intensified.  Russia’s military offensive has advanced in Southern Ukraine and potential talks got pushed back until next week.  Uncertainty over the war impact is hitting investor sentiment hard in Europe and that has provided some underlying support for gold. 

Gold seems to be steadying above the $1900 level, but still lacks a clear catalyst to make a run towards the $2000 level.  Gold still looks like an attractive trade, but other commodities are clearly outperforming.  Global growth concerns will eventually become recession fears and that should be the key catalysts to send gold higher, but that might take a while longer. 

Bitcoin

Bitcoin’s rally is starting to show signs of exhaustion.  Bitcoin needs risk appetite to be healthy for prices to make a run above the $50,000 level, so it should come as no surprise if prices consolidate around the $40,000 level. 

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