By Barani Krishnan
Investment.com – Crude oil prices fell after rising higher last week while gold failed again at a test level of $ 1,800, setting for both key moves next week as oil producers OPEC + and the Federal Reserve gathers their monthly meetings.
The clutter could also be an order for all markets next week as the White House begins releasing details about President Joe Biden’s intentional hike on taxes on America’s wealthiest people.
Biden is said to want a 43.4% increase for the richest of individuals, bringing the combined rate of state and federal in places like New York and California above 50% – the highest yet once in US history. The president is aiming for 0.3% of the US population to finance about $ 1 trillion in child care, universal preschool, and paid leave for workers. However, he will need to overcome a major political hurdle in Congress to do so, Bloomberg reported.
In the meantime, let’s focus on what’s likely to happen in the energy and precious metals space, starting with Wednesday’s OPEC + meeting.
If we believe in the manufacturers cartels, no documents will come out from the April 28 meeting, aiming to pass the pre-agreed production quota from May to July.
OPEC + consists of 23 members – including the original 13 members of OPEC (the Organization of the Petroleum Exporting Countries led by Saudi Arabia) and 10 other oil producing countries directed by Russia – decided plans to increase production by 350,000 bpd in May and June and more than 400,000 bpd in July.
In addition, Saudi Arabia will also unilaterally cut 1 million barrels a day from the same period, starting with increases of 250,000 barrels a day in May and June.
Russian Deputy Prime Minister Alexander Novak, commenting before the meeting, said the idea was to “review the market situation again” before the start of the quota from May to July.
“We planned our plans a month in advance, so if nothing out of the ordinary happens in the meantime, next week’s meeting will either confirm those plans or adjust them,” Novak said. “
Trouble is, pretty much anything happened – especially in India and Japan, about Covid.
In Vienna, too, Iran is making rapid progress with the United States in talks over a nuclear deal aimed at freeing it from Trump-era sanctions to once again export its oil.
On the Covid front, which slightly reduced the number of people damaged by the outbreak, accounting for nearly half of all new pandemic cases globally. With hospitals overflowing to the point of being unbearable, oxygen supplies depleting and people lining up to die before going to see doctors, India’s second wave of coronavirus is shaping up to an impossible crisis. help. To visualize what’s going on, think “Italy” in 2020 and add another 1.4 billion people to the mix.
In Japan, the government has announced the imposition of regulations on Tokyo, Osaka and two other prefectures in an effort to stop an increase in coronavirus infections, just three months before the Tokyo Olympics.
Meanwhile, Iran has been able to do with world powers though more work is needed, a senior EU official said. State media reported, Iranian Deputy Foreign Minister Abbas Araqchi will “assess the current trend of the negotiations will continue to take place, despite the existing difficulties and challenges”.
To underline the importance of these developments, oil prices fell by as much as 3% from Tuesday to Wednesday due to concerns about the situation of Covid in India and Japan, and said that Iran could win a deal. Kernels in May will allow them to gain some additional two million barrels per day in the market.
Futures for both US crude and UK Brent rose for two weekends, but not enough to make up for their dismal start.
Sophie Griffiths, head of UK research and EMEA for online brokerage OANDA, said: “The increase in oil is likely to remain limited until India and Japan, as are the third and fourth largest oil consumers, turning to a corner in the fight against viruses.
Novak, speaking before the OPEC + meeting, described the oil market as “balanced”, saying that if a supply deficit occurs, cartel can always pump more.
Under these circumstances, it is likely that there will be a surplus in the coming months, and the cartel will pump less.
As for context, oil prices fell to a historically negative valuation of minus 40 USD / barrel in April 2020 at the height of Covid-led demand destruction. OPEC + production cuts have since helped the market enter a period of significant recovery, with a recovery accelerating after the vaccine breakthroughs in November.
On the gold front, the yellow metal ended the week erratically despite a precarious close to $ 1,800 that would have been the key to regaining last year’s highs.
It was a heavy disappointment for those who had expected a more meaningful rise in gold after a nine-week high of $ 1,796.15 on Friday. The last time Comex gold traded above $ 1,800 was February 25.
With the weight of the market hanging, analysts expect gold prices to fluctuate until the end of the central bank’s monthly event.
“The diminishing demand for a safe haven has limited gold’s momentum,” said Ed Moya, an analyst at New York’s OANDA. “Gold prices will probably consolidate leading to the Fed in the $ 1,760 to $ 1,800 range.”
Fed Chairman Jay Powell, in an interview with Reuters on Tuesday, said the central bank would limit any inflation levels above its inflation target.
The US economy will temporarily see “slightly higher” inflation this year as an accelerated recovery and supply constraints push prices in some sectors up, but the Fed is committed to keeping inflation is at 2% over the long term, Powell said.
Powell also sought to allay fears that buying Fed bonds would leave Congress with spending and borrowing in an unprecedented deficit.
Congress passed an unprecedented $ 6 trillion in aid between the Trump administration and Biden to help Americans get past COVID-19.
The central bank’s bond purchases, Powell said, are aimed at keeping financial conditions easy and the market working, and “unrelated to the degree of fiscal deficits”, adding that the Fed do not buy bonds directly from the government.
As a result, policymakers are expected to stick with super easy monetary policy at their meeting next week, even as the economy intensifies and vaccination intensifies the United States. may return to a more normal life by 2021.
The price of gold increased
on New York’s Comex made a final trade of $ 1,776.75 before the weekend. Gold prices on the Comex floor closed Friday session down $ 4.20, equivalent to 0.2% to $ 1,777.80 / ounce. During the week, it fell 0.1%.
Gold traded at $ 1,777.11, down $ 6.88, or 0.4%. During the week, spot gold increased by 0.1%. Spot gold moves are indispensable for fund managers, who sometimes rely on it more than futures for direction.
Oil prices rose
The New York transaction, the standard for US crude oil, last made $ 62.05 before the weekend. It settled Friday’s trade at $ 62.14 per barrel, up 71 cents, or 1.2 percent, for the day. It was down 1.6% for the week.
Trading in London, the global standard for crude oil, last traded at $ 65.99 before the weekend. It settled Friday’s trade at $ 66.11, up 71 cents, or 1.1 percent. During the week, it was down 1%.
Energy market calendar forward
Monday, April 26
Estimate Cushing’s private stockpiles
Tuesday, April 27
Weekly report on oil stockpiles.
Wednesday, April 28
Weekly EIA report
Weekly EIA report
Weekly EIA report
and press conference
Thursday, April 29
Weekly EIA report
Friday, April 30
Baker Hughes’s weekly survey about
Disclaimer: Barani Krishnan uses his own range of external perspectives to bring diversity to his analysis of any market. As for neutrality, he sometimes gives conflicting views and market variables. He holds no position in the commodities and stocks he writes about.