Oil in choppy waters, gold range trades

Headless chickens rule oil markets

Brent crude and WTI finished on moderately lower overnight, but that belied the aggressive intraday price action with both contracts falling over USD 3.00 a barrel intraday. The intraday capitulation reversed leaving Brent crude 1.20% lower at USD 72.10, and WTI 1.60% lower at USD 69.20 a barrel. In Asia, the slight rebound in sentiment has seen both contracts add 10 cents a barrel.

Although the short-term outlook for oil is being sunk by negative virus and US legislative sentiment, we should not discount OPEC+ from the equation. OPEC+ left their last meeting open precisely to manage this type of situation. If Brent crude continues to head south from here, I wouldn’t discount OPEC+ stepping in to roll back their recent production increases. Given that compliance is over 100%, this would process would be easy to achieve right now.

Brent crude has resistance at USD 72.50 and then the 200-DMA at USD 73.20 a barrel. Support is at USD 69.00 a barrel. WTI has resistance at USD 69.40 and then the 200-DMA at USD 70.50 a barrel. Support lies at USD 66.00 a barrel.

Gold range trade continues

Gold edged lower overnight as momentum once again faded, leaving the yellow metal 0.40% lower at USD 1790.50 an ounce. In Asia, the recovery in sentiment has lifted it 0.10% higher to USD 1792.30 an ounce.

Gold’s attempts to stage a meaningful recovery continue to disappoint, with traders cutting long positions at the very first sign of trouble intra-day. Gold lacks the momentum, one way or another, to sustain a directional move up or down. Likely, gold will remain a forgotten asset class and face another week of choppy range trading.

Gold has formed a rough double top around the USD 1815.00 region which will present a formidable barrier at USD 1840.00.  Support lies at USD 1790.00, followed by USD 1780.00 an ounce. USD 1790.00 to USD 1815.00 could well be the range for the week.

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
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is 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, Channel News Asia as well as in leading print publications including 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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