Oil prices have been slowly rising since investors exaggerated the Omicron news
|Oil
Oil prices have been slowly rising since investors exaggerated the Omicron news, causing a 16 percent drop in oil prices. Brent, the benchmark for crude oil, has risen 9% since December 1st, indicating that oil demand is unlikely to reduce in the near future. Even the airline industry, which is generally the most affected by new versions, has seen just a little reduction in seating capacity.
Traders should also keep in mind that last week's crude oil inventory data, which is provided once a week, indicated a lower reduction in stocks than expected. Only 240,000 barrels of crude oil were added to stocks. Meanwhile, US oil production increased to 11.7 million barrels per day. The lower-than-expected reduction in oil stocks, along with an increase in US output, signal that supply will likely jump in the immediate term, causing prices to climb.
Gold
As investors anticipate the publication of consumer pricing data on Friday, gold's price activity has been fairly neutral. Treasury yields are rising since Omicron is expected to have little influence on the American economy, and the Federal Reserve will go on with its plan to accelerate tapering, which will result in a faster rise in interest rates beginning next year. When interest rates rise, the opportunity cost of owning gold rises, making the yellow metal less tempting to investors.
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