Oil slips back below $100
Oil prices are marginally up on the day but are back below USD 100 after giving up almost all of the gains since the invasion began. Don’t get me wrong, crude trading near USD 100 is still very high and there remains plenty of Ukraine risk premium priced in at these levels, but it’s given up those gains very quickly.
I expect we’ll continue to see plenty of volatility in oil markets for some time, with plenty of interest in the dips as geopolitical tensions remain so high. One thing that could take some heat out of the market will be a US-Iran nuclear deal, which has reportedly been very close for a while now. An agreement could quickly see around 1.3 million barrels re-enter the market, which is no doubt a big incentive for getting a deal over the line.
Gold gives back safe-haven gains
Improved risk appetite and lower oil and gas prices have seen gold reverse yesterday’s surge to trade back below USD 1,900. This still remains a hugely uncertain environment which I expect will ensure gold remains well supported, even if USD 2,000 now looks quite the distance away.
The response to the invasion has been incredibly short-lived but I don’t expect volatility in the markets to suddenly subside which could continue to favour gold. Even in the absence of major disruptions to Russian oil and gas, prices are still extremely high and will continue to contribute to sky-high inflation around the world which will also be supportive for the yellow metal.
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