Oil takes wild ride, gold yawns

Another wild day for oil

The headless chickens populating oil markets had another day in the sun overnight, sending oil prices rocketing higher after a lower US API Crude Inventory figure, and riding the wave of diminishing virus caution as the news tickers stayed relatively quiet. Tonight’s official US Crude Inventories are expected to fall by 2.5 million barrels. Assuming omicron stays away from its Bad Santa role, a lower number could be the excuse needed in the chicken run to propel prices higher once again.

OPEC+, of course, continues to lurk in the background, and their free option on quickly reigning in production to support prices from the last meeting open should continue to be a warning to overenthusiastic bears. If Brent crude heads towards USD 65.00 a barrel, I wouldn’t discount OPEC+ stepping in. Given that compliance is over 100%, this would process would be easy to achieve.

Brent crude rose by 2.70% to USD 74.00 a barrel overnight, climbing slightly to USD 74.10 in Asia. Brent crude has resistance at USD 74.40 and then USD 76.00 a barrel, with support at USD 73.25, the 200-DMA. WTI rocketed 3.0% higher to USD 71.25 a barrel overnight, adding 10 cents to USD 71.35 in Asia. It has resistance at USD 73.00 a barrel, with support at USD 70.55, its 200-DMA. Trading in Asia is reflecting the same cautious approach seen in Asian equity markets today. Headless chickens can run in any direction randomly.

Gold is sleepless in Singapore

Gold probed USD 1800.00 an ounce overnight but quickly retreated as US yields rose, finishing almost unchanged at USD 1789.00 an ounce. Asian trading is moribund, gold edging slightly lower to USD 1788.50 an ounce as regional markets move into holiday mode.

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 $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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