Oil prices race higher on Saudis and stimulus
Oil prices exploded higher once again on Friday after OPEC+ left production targets unchanged, and an impressive US Non-Farm Payrolls threw more fuel on the recovery/demand fire. Brent crude rose 3.85% to USD69.55, and WTI jumped 3.55% to USD66.25 a barrel.
The attempted Yemeni Houthi drone attack on a major Saudi Arabia oil installation overnight saw both contracts gap higher in Asia, also powered by the US stimulus bill passing through the US Senate over the weekend. Brent crude has leapt 1.60% to USD70.65 a barrel, and WTI has rallied 1.60% to USD67.35 a barrel.
Brent crude has a definite gap on its chart, suggesting it could retreat to USD69.75 a barrel; its Friday high. Support then follows at USD67.50 a barrel. The short-term technical indicators are still not overbought, suggesting further gains to USD73.50 a barrel are possible. The rise through USD70.00 a barrel appears to be flushing out physical buyers who were waiting for the dip. With supplies tight in the physical market, any drop under USD70.00 a barrel will be short-lived now.
WTI’s initial target is USD70.00 a barrel, followed by USD72.50 a barrel. Friday’s high at USD66.40 a barrel becomes initial support, followed by USD63.50 a barrel. Like Brent crude, WTI’s short-term technicals are not yet overbought, suggesting that and dips below USD67.00 a barrel will be keenly sought after.
Gold stages a dead cat bounce
Gold’s relative strength index (RSI) dipped into oversold territory on Friday, and that, combined with a late surge in US equities, helped it stage a slight recovery. Gold rose 0.30% to USD1703.00 an ounce. Gold’s early session gains quickly ran out of steam, and gold has crawled just four dollars higher to USD1707.00 an ounce today.
To say that gold’s price action is unimpressive is an understatement. Gold is climbing the stairs on one leg while descending by jumping out of the 10th-floor window. One positive is that gold tested critical support at USD1689.00 an ounce on Friday; its 61.80% Fibonacci and managed to hold that support. An oversold RSI means that gold may spend the subsequent few sessions consolidating in a USD1690.00 to USD1720.00 an ounce range, forgotten by the rest of the financial world.
Gold remains on life support, though, and if US dollar strength continues, a fall to USD1600.00 an ounce is entirely possible later in the week. Gold needs to recapture the USD1760.00 an ounce region to suggest that the worst is over.
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