Oil slides after Libya ceasefire, Gold clinging on
Oil sliding as Libya ramps up production and Covid dampens demand
Oil prices have pulled back from their range highs in recent sessions, where they had traded despite the significant amount of downside risk.
Some of that risk is now coming into play and weighing heavily on crude, with WTI slipping back below 40 and heading back towards the lower end of its post-summer range.
Libyan production has been rapidly increasing, hitting 500,000 barrels per day last week from less than 100,000 during the blockade. Friday’s ceasefire announcement has piled more pressure on oil prices and combined with the rising Covid numbers, is a massive blow on both the supply and demand side, as far as prices are concerned.
A move below the post-summer lows may alert the attention of OPEC+ and force a rethink of January’s two million barrel increase in output.
Gold clinging on for now
The great gold consolidation continues, with price holding up relatively well this morning and clinging onto support, despite broader market sentiment turning negative and the dollar making decent gains.
This hasn’t been the best combination for gold prices this year but they are showing some resilience in early trade. The yellow metal is finding some support in the $1,890-1,900 region, with resistance forming around $1,930.
The walls are continuing to close in but that may remain the case for the next week or so, unless the confirmed collapse of stimulus talks – whenever that comes – tips it over the edge and stops get wiped out. That could make for an interesting move, with the path of least resistance seemingly below.