Oil Sellers Fret Over Saudi Threat, API Inventory Declines by 6.8M Barrels
2023.05.24 03:53
- API inventory data posts a 6.799 million barrel drop vs. 0.525 million expected to build, Cushing rises 1.71 million
- Gold steadies as the dollar rally extends
- Bitcoin streak of monthly gains is in jeopardy
Oil
On Wall Street, we have the mantra of ‘Don’t fight the Fed,’ but that is currently being tested as investors continue to price in rate cuts for later this year. Energy traders have quickly learned that when it comes to oil prices, you ‘Don’t fight the Saudis’ as they will do whatever it takes to defend prices.
Saudi Energy Minister Prince Abdulaziz bin Salman said, “I keep advising them that they will be ouching – they did ouch in April.” The Saudis are not comfortable with near the low-$70s, and they will likely support further production cuts if it looks like oil prices could be heading back to the mid-$60s.
WTI crude pushed higher after oil inventories posted an unexpectedly large draw.
Gold
prices are wavering as investors digest a debt deal impasse and further signs that inflation could be sticky. Safe-haven flows on debt deal doubts are growing as we move a day closer to the debatable X-date. The risk that the government could miss some debt payments is growing, which should lead to market stress. What complicates the gold trade is that US economic data shows that the service sector remains strong, and rising could keep inflationary pressures going.
Gold is attempting to recapture the $2000 level, which should hold as debt drama grows. Rising risks to the outlook should keep investors scrambling for safety, benefiting gold. In addition to the debt deal impasse, rising tensions with China and banking fears should keep investors defensive.
Bitcoin
steadies as investors battle debt-ceiling uncertainty and become more pessimistic about stocks. The crypto-verse is still very weak, as too many companies struggle to connect with traditional banking. The crypto space can’t grow given the current regulatory and banking environment, which should limit whatever gains we see.
Original Post
