Oil prices ease in Asia
Oil prices traded in a USD 5.00 range overnight, but despite the overcaffeinated traders of the oil market raising their blood pressures intraday, both Brent and WTI ultimately settled almost unchanged. This is as good a reason to my readers to not get caught up in short-term market moves generally, as any. Brent crude fell 0.30% to USD 101.40 a barrel, and WTI finished 1.35% lower at USD 97.00.
Oil is softening in Asia today with regional buyers absent for a change from the open. It seems that China announcing 24,000 new virus cases, and no end to the Shanghai lockdown, has spooked buyers. Markets fear deeper economic disruption, and by default, lower China energy consumption, weighing on prices. Bent crude has slipped through USD 100.00 a barrel, falling 1.50% to USD 99.85 a barrel. WTI has fallen by 1.50% to USD 95.55 a barrel.
With the US and IEA SPR releases out there and priced in, it seems that China is driving the bearish price action. Brent and WTI have fallen to the bottom of my ranges, but I expect Brent to remain in a choppy USD 100.00 to USD 120.00 range, with WTI in a USD 95.00 to USD 115.00 range. Only a serious virus escalation in China changes that outlook.
Gold’s consolidation continues
Gold continued its sideways trading overnight. Despite the US dollar and US yields edging higher, gold still finished 0.30% higher at USD 1931.50 an ounce. Gold is comatose in Asia today, easing 0.10% lower to USD 1929.70. Gold has confined itself to a rough USD 1920.00 to USD 1940.00 an ounce range this week and is showing little proclivity to react to geopolitical events or moves in the US dollar or US bond yields. You could interpret that as either bullish or bearish for gold.
For my part, despite the weeklong holding pattern, I believe the risks are still skewed to the downside for gold, especially if US yields and the US dollar keep climbing. Only a rally through USD 1970.00 changes that outlook. Failure of USD 1915.00 an ounce will signal a retest of important support at USD 1880.00. Failure of USD 1880.00 should see a capitulation of long positions, extending losses to the USD 1800.00 region.
Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at firstname.lastname@example.org. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.