Oil pares gains after surge to USD 80
Oil has pulled back off their highs over the last 24 hours, with yesterday’s risk aversion, dollar strength and surprise inventory build from API triggering some profit-taking in crude prices. The outlook for the market continues to look bullish, with soaring natural gas prices dragging oil higher. A cold winter could see the rally pick up a few notches again.
Natural gas prices also pulled back after being up more than 10% at one stage yesterday, with oil prices falling in tandem. The reversal came just as Brent was flirting with USD 80 a barrel, something it may have to wait a little longer for. Profit-taking took the wind out of its sails but there’s still so much momentum with the rally. Any pullbacks may be short-lived, with a big test of support coming around USD 75 in Brent and USD 73 in WTI.
Gold fails to generate any upside momentum
Gold’s rally fell at the first hurdle today, with the yellow metal running into immediate resistance around USD 1,740-1,750, where it had seen strong support over the last couple of weeks.
Higher yields have weighed heavily on gold this past week and the dollar performing well in risk-averse trade over the last couple of days has been a further blow. It’s hard to build much of a bullish case for gold at the minute; inflation is high but not high enough, yields rising, technicals unfavourable.
We could see the sell-off lose some momentum as it closes on USD 1,700, although the big test comes a little below here around USD 1,680 which is long-term support.
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