Oil slides, gold trading sideways

Oil

Crude prices are lower after US stockpiles rose more than expected and after Iran agreed to restart nuclear talks in November.  The EIA crude oil inventory report showed a 4.286 million build, higher than the 1.5 million consensus estimate and prior draw of 431,000.

A 3.9 million draw in Cushing could start to lead to some worries that inventories are getting close to hitting tank bottoms.  Cushing has posted 4 consecutive draws to 27.3 million barrels, the lowest since October 2018.

Crude exports improved as Latin America emerged from restrictive COVID measures.  This report had a mixed demand story as jet fuel demand stalled, gasoline demand was good, and distillates demand was slightly below expectations.  US production remained steady at 11.3 million bpd.

Tehran’s chief negotiator made today’s oil trade an easy one after signaling Iran would return to nuclear talks before the end of November.  This is just a restart of talks and the process to get a deal done will be lengthy and unlikely to lead to immediate sanction relief, which means the global energy crunch will unlikely see any immediate benefits.

Helping send oil prices lower earlier was news that the White House plans on addressing the short-term imbalance in supply and demand and doubling their commitment to reduce carbon emissions by 2030.  The White House doesn’t want to play the SPR card just yet, but they have no shame in flaunting it.

WTI crude is lower on the day but buyers are eagerly awaiting to buy dips as the oil market deficit story will not change anytime soon.

Gold eyes central banks

Gold prices are seesawing as central bank watchers struggle to assess inflation expectations and whether central bankers’ rate increases will disrupt their respective economic recoveries.  The short-term dollar outlook will be choppy following the Bank of Canada hawkish rate decision, as the ECB punts this meeting, and ahead of the Fed’s formal taper announcement.  The curve is flattening and that ultimately should be positive for gold prices.

Gold should stabilize here and might not do much of anything until after both the ECB and Fed policy decisions.  Gold could form a broadening formation between USD 1,760 and USD 1,820.

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