Oil drops on stockpile build while gold extends rally

Oil prices dropped again on Friday. That makes three days straight. And now, for the first time in three weeks, the market’s facing a clear weekly loss.

Brent crude fell by $0.35 to $66.64 a barrel by 08:10 GMT. U.S. West Texas Intermediate slipped $0.33 to $63.15. Each was down 0.5% on the day. For the week, Brent is down 2.2% and WTI dropped 1.3%.

The losses followed news that U.S. crude stockpiles rose by 2.4 million barrels last week. Analysts had predicted a draw. This surprise increase in inventories raised fresh concerns about slowing demand.

At the same time, supply expectations are growing louder. OPEC+, which includes Russia and Saudi Arabia, plans to meet on Sunday. Eight members are now talking about raising output.

OPEC+ plans fresh supply before schedule

OPEC+ already controls nearly half the global oil output. Now they’re thinking of ending a second layer of supply cuts over a year early. The proposed boost is 1.65 million barrels per day, which equals 1.6% of world demand. It’s a big move and would flood the market with more barrels at a time when demand is looking soft.

“There are increasing stories and signs of a future where feedstock supply is unlikely to be a problem,” said John Evans of PVM, a brokerage. Translation: there’s no shortage of oil coming.

Downstream strength had been helping prices stay supported, according to BMI analysts, but they warned this support may fade. Refining margins could weaken as refiners start maintenance and global demand slows in the coming months.

Meanwhile, Donald Trump stirred the pot on Thursday. The former U.S. president told European leaders to stop buying Russian oil, according to a White House official. That kind of political interference always adds risk. Any cut in Russian exports, or even just the fear of one, could spike global oil prices again.

Gold breaks away while Treasuries stall

While oil is struggling, gold is exploding. Investors are pouring into the yellow metal as fears around inflation, central bank policy, and government debt hit hard. Treasuries, normally the safe-haven asset, are starting to look shaky.

“Gold is the new safety,” one analyst put it. Central banks are clearly thinking the same way. Global reserve portfolios used to be full of U.S. Treasuries. Now those same banks are stacking gold instead.

That shift is massive. Treasuries have been “treading water,” while central banks’ gold reserves are ballooning. The price of gold hit a new high this week, and long-term bond yields reached levels not seen in years, some never before.

The divergence isn’t random. There are four big reasons: inflation, fiscal trouble in the U.S., weakened trust in the Fed, and global political stress. All of them hit confidence hard.

Currencies felt the pressure too. On Thursday, the British pound dropped 1.24%, hitting its lowest point in over three weeks at $1.3375. The Japanese yen fell to 148.40 per dollar, its weakest level since August 1. That was a 0.84% slide. The euro didn’t escape either. It fell 0.61%, landing at $1.1637.

Traders are now betting on a rate cut in 12 days, hoping it might calm the storm. Until then, volatility is the name of the game.

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