Oil surges on falling US crude inventories
US official crude inventories unexpectedly fell by 7.2 million barrels overnight, much higher than the forecast 0.7-million-barrel drawdown expected. Combined with reports of oil moving out of floating storage, and strong manufacturing PMI data across the globe, it was easy to form a constructive case for oil prices rising. The market duly obliged with Brent crude rising 1.30% to USD 42.00 a barrel, and WTI rising 1.05 to USD 39.80 a barrel.
The overnight price action and EIA data have temporarily lifted the Covid-19 gloom that has capped oil prices all week. That said, both contracts now rest solidly in the middle of their June ranges. Brent crude has challenging resistance at USD 44.00 a barrel, as does WTI at USD 42.00 a barrel.
Oil prices are unchanged in Asia in quiet trading, as markets await the US data releases this evening. Oil is likely to trade sideways until that event. It is unlikely, that even a positive data dump from the US tonight, will give oil the needed momentum to carve out post-March new highs. Tomorrow will be a quiet day, with the US closed.
Gold unnerves bullish positioning
Bullish sentiment, including the author, took a hit overnight, with gold narrowly avoiding a bearish outside reverse technical move. Gold initially probed topside, setting a new 8-year high at USD1790.00 an ounce. Once the Pfizer vaccine news, and positive US data, hit the wires though, sentiment quickly reversed, with gold falling to USD1760.00 an ounce, before closing at USD1769.00 an ounce.
The peak-virus sentiment returning in markets elsewhere, the bullish case for gold is now challenged. I noted yesterday that gold lacked the momentum anyway, for a serious assault on long-term resistance at USD1800.00 an ounce. Gold has initial support at USD1760.00 an ounce, the overnight low. Critical support though lies at USD1745.00 an ounce. A daily close below this level will negate gold’s rally in the near term, and set up markets for a deeper correction.
Gold is almost unchanged at USD 1767.00 an ounce in Asia. Its fate will be determined by the heavy release schedule of US economic data this evening.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.