Oil prices remain firm
Oil prices have remained near multi-week highs this week, supported by surging gasoline and distillate prices in the US, and fears around an EU ban on Russian oil imports remaining in play. If markets start pricing in peak-Shanghai-lockdowns, that will be an additional supportive tailwind for oil prices.
Brent crude rose by 2.45% to USD 113.85 a barrel overnight, where it remains in subdued Asian trading. WTI rose by 3.30% to USD 113.65 a barrel, where it remains in Asian trading. The gap between Brent and WTI has closed to zero over the past two sessions, highlighting the squeeze on refined supplies in parts of the US. This is a significant development in my opinion and suggests that the risks are starting to swing to the topside once again for oil after months of range trading.
Resistance at USD 115.00 a barrel for Brent crude has capped gains once again. Failure signals a retest of USD 120.00 in the sessions ahead. Support lies at USD 108.80 a barrel. WTI has taken out resistance at USD 111.50 a barrel, which now becomes support. It is now threatening the top of my longer-term range call at USD 115.00.
Gold stages relief rally
Having wilted over the past two sessions, gold staged a corrective 0.72% rally to USD 1825.50 an ounce overnight, edging 0.16% higher to USD 1827.75 in Asian trading. A softer US dollar and softer US yields overnight saved gold from further losses, but it remains completely at the mercy of US dollar weakness for support.
The overnight lows around USD 1789.00 forms initial support, followed by USD 1780.00 an ounce. Failure of the latter suggests a deeper correction to USD 1700.00. Gold has resistance just above USD 1830.00, followed by the 200-DMA at USD 1836.50, and then USD 1850.00 an ounce. Only a sudden US dollar sell-off is likely to change the bearish technical outlook.
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