Libyan return swamped by hurricane concerns
Oil prices have risen in Asia this morning as the US dollar weakens slightly, with concerns about Hurricane Beta in the Gulf of Mexico, swamping the apparent restarting of mothballed production in Libya. That followed a sideways session on Friday, where both Brent and WTI faded slightly into the end of the week.
In the grand scheme of things, even a return of full Libyan production, unlikely as that is, is an insignificant amount for international markets. It, unfortunately, comes as oil markets are awash with black gold from OPEC+, with a still weak consumption outlook. The threat of the return of large scale Covid-19 lockdowns in the UK and Europe will further add to the gloom.
Oil’s rally has been propelled by production and refining concerns in the Gulf of Mexico states of America, and not by a structural change in the consumption picture for the better by the world as a whole. As such, the rally could quickly fade if Hurricane Beta passes without much incident.
Brent crude has risen 0.50% today to USD43.30 a barrel but faces resistance at its 50 and 100-day DMA’s at USD43.70 and USD44.20 a barrel. Support lies at USD42.50 a barrel initially. WTI has climbed 0.80% to USD41.25 a barrel today on hurricane fears. That has given it a better technical picture with a break of the USD41.50/USD41.80 resistance zone opening potential gains to USD4.00 a barrel. The rally though is entirely dependent on the Hurricane Beta situation. Support lies at its 200-DMA at USD40.10 a barrel.
Gold continues to consolidate in a contracting range
Gold rose slightly on Friday and has eked out a 0.15% gain to USD1953.00 an ounce this morning on a weaker US dollar. Gold though, remains in range-trading mode, with resistance at USD1975.00, and support at USD1935.00 an ounce.
Gold’s range over the past month has slowly but surely been contracting, suggesting that a breakout is coming. Unfortunately, the charts do not hint at which direction that will be. Gold appears to be in a triangle consolidation with support at USD1905.00 an ounce, and resistance today at USD1965.00 an ounce. Although the top of the triangle is closer, gold lacks momentum, and the potential for a false upside break is high.
With a light data week, headline-driven trading, with the inevitable tail-chasing by short-term players is almost certain to continue. Longer-term players should probably stay away and wait to see how the situation resolves.
Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at firstname.lastname@example.org. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.