WTI crude oil hedging up amidst market fluctuations
The price of WTI crude oil is hedging up during early Thursday trading, amidst volatile markets that saw the cost of the barrel drop more than 12% during the previous session. Oil price fluctuations are due to uncertainty amongst traders over whether other major exporters will step up production and fill in the gaps left by the progressive withdrawal of Russian oil from the markets. Some nations, such as the UAE and Saudi Arabia, still have spare production that could be deployed to global markets to alleviate the supply side pressures that are being exacerbated by the embargo on Russia. However, conflicting messages from those countries are leaving the market guessing what their stance on the issue really is, creating conditions that may lead to further price volatility.
Gold prices dropped below $2,000 per ounce during Wednesday’s session and continued the hedge down during early Thursday trading. Risk appetite improved in the financial markets, as oil prices retreated from multi-year highs, following calls for the stepping up of oil production in countries with spare capacity. Despite the continuation of the geopolitical risks posed by the conflict in Ukraine and the spectre of high inflation hovering over the global economy, the prospect of some relief in the energy market was sufficient to reduce demand for the safety of gold, in a dynamic that also saw the retreat of other refuge assets.
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