OPEC bullish on oil demand, Gold eyes US data

Oil rising as OPEC forecasts stronger demand next year

Oil prices are rising on Monday, with WTI exceeding $70 once more and reaching its highest level in more than a month. This comes despite demand challenges in the coming months as a result of the Delta variant, which OPEC alluded to in its monthly report. Despite this, demand remains strong supported by output disruptions elsewhere.

The group also revised higher expectations for 2022, when it expects output to surpass pre-pandemic levels. Despite near-term risks to the demand outlook, OPEC+ is continuing to increase its output by 400,000 barrels per day each month, in line with what it agreed in July.

The technical picture is looking better for oil prices following a period of consolidation around the $70 level. Momentum has picked up with the recent move, a sign perhaps that the rally has legs and a period above here can be sustained. The summer highs may now even be in sight once more.

Gold has one eye on the Fed meeting

Much of the market already appears to have one eye on the Fed meeting next week and this is particularly true of gold, which has been hovering around $1,800 for much of the last month.

The case has been building for the Fed to take a more patient approach to tapering which has revitalized the yellow metal but we may need to see more evidence before it takes the next step. It once again failed to break $1,833 after the jobs report, further establishing the level as a key barrier of resistance.

Policymakers have seemingly been keen to ensure the data doesn’t distract from the central bank’s intentions to taper this year, understanding the importance of effective communication when approaching major policy shifts. That’s held gold back even as the data has softened. There’s plenty more to come this week but it may trade cautiously still, ahead of next weeks meeting.

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