OPEC cuts production, gold pares gains

OPEC+ boosts oil prices after large cut

Oil prices are edging lower today after OPEC+ announced a huge production cut on Wednesday of two million barrels per day. With the group failing to hit output targets by a widening margin as the year has progressed, the net cut will be around half that, if not less, but that’s still a substantial reduction in an already tight market.

Of course, the global economy is slowing as a result of an inflation and interest rate shock – which soaring oil prices and underproduction is partially responsible for – and that should weigh on demand over the next year offering some balance. But that is highly uncertain so it’s understandable that the backlash has started as higher oil prices will only compound inflation and cost-of-living issues in the interim.

Gold relief rally over?

Gold is paring gains again today after a strong relief rally earlier in the week. The yellow metal was buoyed by a softening dollar and lower yields but both are bouncing back. It was always likely to face strong resistance above as the rally was driven more by hope than substance. A weaker jobs report tomorrow could give it another boost but even that may prove to not be sustainable.

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Former Craig

Former Craig

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.