Oil plunges due to price caps and tighter Chinese restrictions
The G7 is working to limit Russian oil prices. Oil prices fell slightly on Thursday. According to reports, Brent crude oil fell sharply on Wednesday as the G7 continued to work towards a price cap on Russian oil. This would be close enough to $65 that they are able sell it at a profit. That would blunt the effectiveness of the cap and ensure we don’t see any shortages in supply. It may be necessary to keep all parties on board. Some countries are concerned about the domestic consequences of a tighter cap.
The discussions will continue but these reports have weighed on the price of oil at a time when restrictions, maybe even lockdowns, in China threaten demand in the world’s second-largest economy. And amid a report – since denied – that OPEC+ could boost output next week. I’m not sure what the motive would be at this point but perhaps it’s heavily conditional on the outcome of the G7 talks.
Gold buoyed by “dovish pivot”
Gold bulls very much welcomed the FOMC minutes on Wednesday and we’re continuing to see the price benefit today. The yellow metal has massively benefited from the “dovish pivot” last month if we can even call it…