Oil rally snaps on hope for Venezuelan supply
2023-10-17
Summary:
Oil stabilized, with hopes rising for a US-Venezuela deal to ease sanctions on crude exports in exchange for monitored elections next year.
Oil steadied after losing more than $1 on Monday as expectations rose the US and Venezuela could soon reach a deal easing sanctions on crude exports in return for a monitored presidential election in the South American country next year.
Venezuela is the country with the world’s largest oil reserves, pegged at over 300 billion barrels. But with no substantial investment in Venezuela's oil sector for over a decade, any real oil output increase will take time, according to analysts.
Meanwhile the Israel-Hamas conflict did not appear to threaten oil supplies in the short term. President Vladimir Putin is set to hold talks with Iran, Israel, Palestinians, Syria and Egypt following Blinken’s visit.
Gold held above the key 1,900 ceiling on Tuesday, easing from its highest since late September. The precious metal notched its biggest one-day rise in seven months last Friday.
Earlier this month, speculators turned net short on COMEX gold for the first time since November 2022. They increased their net short positions in the week ended 10 October.
If the conflict in focus is confined in the Gaza Strip, both oil and gold could lose steam and economic data and interest rate path will dominate the assets again.
Gold has been pressed by significant converged resistance. It looks like the 200 EMA is offering a little bit of support. A drop below that will lead to the 1900 level.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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