Saudi raises prices, gold jumps on NRP

Saudi Arabia hikes prices to Asia

With OPEC+ refusing to bow to external pressure last week and raise production targets, and with the US Non-Farm Payrolls data outperforming, oil prices finished last week on a very positive note. Brent crude rose 1.75% to USD 82.30, and WTI leapt 2.50% higher to USD 81.35 a barrel.

Over the weekend, Saudi Aramco announced a sharp hike in light crude prices to Asian customers in December by USD 1.40 to a USD 2.70 per barrel premium. Markets had forecast a hike of between USD 0.50 and USD 1.00, which caught Asia off guard this morning. Northern Asian markets, all massive energy importers, fell today, and crude prices have increased sharply in regional trading. Brent crude has jumped by 1.55% to USD 83.60, and WTI has risen by 1.05% to USD 82.25 a barrel.

With Reuters reporting today that China’s state grid is warning of tight winter supply still, and with international travel reopening today in the US, (think jet fuel demand), as well as ongoing easings in Asia/Pacific, and crude stocks at shallow levels in the US Cushing Hub, oil’s fundamentals remain constructive. OPEC+ is not raising production, and natural gas prices continue to hold at high levels.

Brent crude has resistance at USD 85.25 and USD 86.00 with support at USD 82.50 and USD 82.00 a barrel. WTI has resistance at USD 83.50 and USD 85.00, with support at USD 81.00 a barrel.

Gold explodes higher after US data

The rather bizarre post-Non-Farm Payroll price action was capped by gold’s explosive rally on Friday, despite US yields and the US dollar easing only slightly. Gold rose 1.50% to USD 1818.00 an ounce, gaining over 26 dollars on the day. In Asia, trading is subdued, but gold has slightly increased by 0.10% to USD 1819.85 an ounce.

As with previous gold rallies, I am taking Friday’s one with a massive grain of salt. The price action suggests that stop-losses were triggered through USD 1800.00 and USD 1810.00, along with the usual rush of trend-following and fast money buyers. If past performance is a judge, none of that positioning is “sticky,” with a zero tolerance for any adverse movements against the positioning. In other words, it will rush for the exit door and sell as soon as gold starts moving lower, causing another downside spike.

Nevertheless, if gold can hang on to these gains, things could be about to get interesting on the upside. If gold can hold above its well-defined resistance zone between USD 1832.00 and USD 1835.00 an ounce, it will trigger an inverse head-and-shoulders pattern that would target a return to USD 2000.00 an ounce. Support is at USD 1800.00 and USD 1785.00 an ounce, although I suspect that a fall through USD 1810.00 will be enough to trigger a mad fast-money dash for the exit door.

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