Oil markets continue to consolidate
Having retraced nearly 50% of last week’s rally, oil markets rose modestly overnight, as both Brent and WTI consolidate recent gains. The official US crude inventory data show massive swings in inventories, gasoline and distillate volumes, but clearly impacted by the Texas deep freeze, gave no clear directional signal to the markets.
Brent crude rose 1.50% to USD68.20 a barrel overnight, with WTI rising by 1.40% to USD64.60 a barrel. Hopes for improvements in US-Sino relations have lifted prices again in Asia, both contracts increasing 0.50% to USD68.50 and USD65.00 a barrel, respectively.
Brent crude has support at USD66.50 a barrel, with resistance at USD69.30 a barrel. WTI has support at USD63.20 a barrel and resistance at USD65.95 a barrel. I expect both contracts to continue consolidating around these levels over the next 24 hours, as markets await directional moves elsewhere. Overall, oil will find plenty of willing buyers on material dips, particularly as the Biden stimulus passage is now assured.
Gold continues to show fight
Gold rose once again overnight, bizarrely as US inflation fears ebbed, leading to slightly lower yields and a US dollar. Gold climbed by 0.65% to USD1726.00 an ounce, and has risen another 0.30% to USD1732.00 an ounce in Asian trading.
Gold’s price action has shown impressive fortitude, which I admit has caught me by surprise, rebounding further and faster than I expected. Nevertheless, the US inflation genie has not been slain, particularly as the Biden stimulus will be signed into law tomorrow. If gold has been consistent in one thing in 2021, it is disappointing bullish investors. The price action typically being a climb up the stairs, followed by a jump out of the window.
Until gold can recapture the USD1689.00 50% Fibonacci breakout on a weekly basis, I shall remain unconvinced. Gold has interim resistance at USD1740.00 an ounce. Support is at USD1708.00, followed by USD1689.00 and USD1676.00 an ounce, Monday’s low.
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