Oil gives up earlier gains, EIA reports higher draw
Oil prices are flat on the day after giving up earlier gains and continue to trade not far from their summer lows. Even a larger than expected draw in inventories, reported by EIA, has done little to lift prices. Brent ran into resistance earlier in the day around USD 70 and has been on a downward spiral since.
Crude prices continue to look vulnerable around those mid to late summer support levels – USD 65 in WTI and USD 67 in Brent. Slower growth in China as it imposes further restrictions in response to rising Covid cases and some weakness in a few US data points this past week has driven the softness in oil prices.
Whether that’s enough to drive it below such a key support level is another thing. A move below USD 65 in WTI, for example, could see prices drop back into Q2 trading ranges between USD 57 and USD 65. This would be quite a drop from the levels we’ve seen the last couple of months and surely reflect growing concerns about the spread of delta and the implications for fourth-quarter growth.
Gold sees profit-taking after resurgence
Gold prices are pulling back from this week’s highs after falling just short of USD 1,800. This is a big psychological barrier for the yellow metal, not to mention a key support level for most of July and the 50% retracement level for the June highs to August lows. It’s no wonder we’ve seen profit-taking kicking in.
The question is whether that’s all we’re seeing or can we expect more from the yellow metal, having looked down and out only a week or so ago. Further significant resistance lies just above here, with the 200-day SMA falling not far from the July highs, a break of which would be very bullish, indeed.
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