OPEC+ comments send oil higher
Although the pre-OPEC+ JMMC meeting was postponed yesterday due to Russian technical issues, oil still managed to recoup its intra-day losses to finish almost unchanged, as OPEC+ upgraded its consumption forecasts. A much higher fall in US API Crude Inventories also helped prices higher later in the session.
Brent crude finished the day 0.80% higher at USD 75.25 a barrel, while WTI rose 0.95% to USD 73.45 a barrel. In Asia, early gains have been unwound to leave both contracts unchanged.
Markets have primarily priced in OPEC+ raising production by 0.50 million barrels a day at tomorrow’s meeting, and a lesser number would now cause a spike in prices. Month and quarter-end flows will see choppy range trading today ahead of the meeting tomorrow.
I expect Brent crude to range noisily between USD 73.50 and USD 76.50 a barrel and WTI between USD 72.00 and USD 74.50 a barrel. A break of any of those support resistance levels will signal oil’s next directional move. I am happy to be patient at these levels as OPEC+ has surprised and burnt me before.
Gold is vulnerable to more losses
US dollar strength pushed gold lower overnight, breaking support at USD 1760.00 an ounce, leading to a spike lower to USD 1750.50, likely on stop-losses. It then recovered to finish the day 1.0% lower at USD 1761.00 an ounce.
Despite a late recovery and being unchanged in Asia, gold only just managed to close above the USD 1760.00 an ounce support, which will now be an intra-day pivot point. Gold is vulnerable to more US dollar strength, and the plethora of tier-1 data over the next two days will test the mettle of long-suffering bullish gold investors.
Failure of USD 1750.00 now will signal a deeper retest of USD 1720.00 an ounce. Any rallies are likely to be capped at USD 1780.00 ahead of solid resistance between USD 1790.00 and USD 1800.00 an ounce. One factor supporting the beleaguered yellow metal is its relative strength index (RSI). The RSI remains just above oversold territory and could assist gold in recovering any sudden sell-offs.
The USD 1680.00 an ounce region remains my line in the sand on the longer-term chart picture. A comprehensive failure means all bullish bets are off.
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