Oil dips on Suez news, gold consolidates

Oil markets fall on Suez Canal developments

Oil markets rallied impressively on Friday, capping an extremely volatile week. Expectations of a move by OPEC+ to loosen production targets have receded, US recovery expectations continue to rise, and the ongoing Suez Canal situation all combined to boost prices on Friday. Brent crude rose 3.65% to USD64.40 a barrel, and WTI rose 4.0% to USD60.80 a barrel.

News on Monday that the Ever Given appears to have been refloated in the Suez Canal has sent prices immediately lower in Asia, with hopes rising that the delivery bottleneck to Europe will soon reopen. Brent crude has fallen 1.0% to USD63.75, and WTI has declined 1.35% to USD60.00 a barrel.

Oil’s volatile trading is set to continue, and if the Suez Canal situation is correct, oil’s recovery pre-OPEC+ may well be over. Given the volatility last week, Brent looks set to move to the lower end of its USD60.00 to USD65.00 a barrel range. Similarly, WTI is likely to drop to the lower side of its USD57.50 to USD62.50 a barrel weekly range.

Gold’s consolidation continues

Gold prices continue to quietly consolidate, ignoring the noise from other markets. On Friday, gold drifted 0.35% higher to USD1733.00 an ounce, giving up some of those gains this morning, falling slightly to USD1730.00 an ounce.

Gold’s overall price action remains construction, though, and the yellow metal is attempting to form a longer-term base, between its 61.80% and 50.0% Fibonacci retracements, setting the scene for a move back above USD1800.00 an ounce if all goes to plan.

Gold has support at USD1720.00 and USD1700.00 an ounce, followed by the 61.80% retracement in the USD1685.00 area. It has initial resistance at USD1755.00 an ounce, followed by the 50.0% retracement at USD1760.00 an ounce.

I expect gold to continue to range between USD1720.00 and USD1750.00 an ounce this week.

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