Oil looks for cue from OPEC+ meeting

Oil awaits OPEC+

Oil markets are quiet in Asia with mainland China and South Korea on holiday. On Friday, a weaker US dollar saw Brent crude and WTI rise modestly in lacklustre trading. Brent crude rose by 1.05% to USD 79.15, and Brent crude rose by 0.90% to $75.70 a barrel, where both remain in Asia.

Oil markets are clearly waiting for the outcome of the OPEC+ meeting this afternoon where the grouping will decide on whether to adjust production targets to mollify the tremors in world energy markets. I expect a binary knee-jerk reaction to the meeting’s decisions. A hike in production targets leading to an immediate spike lower in prices, and, if, unchanged, a spike higher in oil prices.

Brent crude could well trade at either USD 76.00 or USD 82.00 when the meeting results are released. Given that natural gas prices remain in space, having risen again today in Asia, I believe any knee-jerk spike lower by either Brent crude or WTI will be short-lived. Even if OPEC+ increases production, there will be at least a month’s delay and probably longer before the pumps spool up. Nothing that OPEC+ does will alleviate immediate demand in the oil spot market and will certainly not impact gas markets.

Brent crude has support at USD 76.60 and USD 76.00 a barrel, with resistance at USD 79.50 and USD 80.75 a barrel. WTI has support at USD 74.25 and USD 73.00 a barrel, with resistance at USD 76.00 and USD 76.60 a barrel. The technical outlook remains constructive for both contracts.

Gold rises on lower US dollar

Gold rose modestly on Friday as the US dollar eased. Gold finished the day 0.22% higher at USD 1761.00 an ounce, before easing slightly to USD 1798.20 an ounce in moribund Asian trading today. What will give long-suffering gold bulls some cheer is that gold has consolidated the strong gains it made last Thursday.

The relief could be short-lived though if the US dollar uptrend resumes in earnest this week. However, if currency markets spend the week consolidating ahead of Friday’s Non-Farm Payrolls, the gold rally could continue as more medium-term bottom fishers are lured in.

Gold has support at USD 1750.00 followed by a double bottom at USD 1722.00 an ounce. Initial resistance appears at USD 1766.00 followed by USD 1780.00 an ounce. Gold will face far more formidable resistance in the USD 1800.00 to USD 1808.00 an ounce zone, technical resistance and housing the 100 and 200-day moving averages.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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