Crude Oil Hampered By OPEC Demand Outlook, Gold Price Eyeing PPI Data

Crude oil prices have regained lost ground in recent days, as the gradual increase in road usage suggests that a broad recovery in overall fuel consumption is picking up speed. Apple mobility data shows that the number of people driving in Europe, the UK, and the US, has continued to rise since the start of the year, as the rollout of coronavirus vaccinations and falling rate of infections allows several developed economies to begin returning to a level of normality.

Supply constraints have also underpinned the growth-sensitive commodity, as OPEC+ shocked market participants by opting to keep its current output settings steady, despite previously contemplating introducing an additional 1.5 million barrel a day of output in April. However, the cartel cut its demand estimates for the second quarter of 2021, citing the impact that “ongoing lockdown measures, voluntary social distancing and other pandemic-related developments” are having on economic activity.

Crude Oil Hampered by OPEC Demand Outlook, Gold Price Eyeing PPI Data

Data Source – Apple

This rather dim outlook could take some wind out of the sails of crude oil prices and lead to a short-term pullback towards the $64 mark. Gold prices, on the other hand, are looking to extend recent gains after softer-than-expected core CPI data out of the US cooled underlying inflation expectations and directed capital back into longer-term Treasury bonds. The resulting turn lower in yields relieved some of the downward pressure on the anti-fiat metal.

That being said, the signing of President Joe Biden’s $1.9 trillion coronavirus-relief package in to law, in combination with a Federal Reserve that seems rather unfazed by the recent rise in longer-term rates, may limit Bullion’s potential upside in the near term.

Nevertheless, a softer-than-expected US PPI print for February could pave the way for gold prices to continue rebounding higher ahead of the FOMC monetary policy meeting next week.

Crude Oil Daily Chart - RSI Divergence Hints At Uptrend Exhaustion

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