Is an output hike really feasible?
Oil prices are marginally higher on Wednesday, continuing the recovery from a sell-off that was triggered by speculation that OPEC+ could consider a significant hike in output when it meets early next month. The move would certainly come as a surprise considering its two million barrel cut last month, the deteriorating global economic outlook, Chinese Covid restrictions, and the uncertainty around the Russian oil price cap.
Of course, the cap may be part of the reason for the discussions, if they have in fact taken place. Without the backing of Russia, that would create a whole new dynamic within the group, even threaten the “+” element of it which would be a big shock. Those rumours have been strongly denied though which is why the price has recovered its losses. The only issue now is the economy, China, and what impact the G7 decision will have on Russian output. I don’t think volatility is going anywhere.
Can the FOMC minutes be the catalyst for a breakout?
Gold appears to have established a range over the last week or so, with the upper end falling around $1,780 – a major area of support in the first half of the year – and the lower around $1,730 – a major barrier of resistance in September and October. The FOMC minutes may determine which of these levels gives way first and whether gold can build on its recovery rally this month after such a long period of declines.
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