Crude rises on EU oil ban, gold steady

Europe’s ban on Russian oil sends black gold higher

The announcement that a partial EU ban on Russian oil imports has made it over the finish line sent oil prices higher overnight. Recovering PMI data from China today, and by default recovering energy consumption, has seen the rally continue in Asia. The price action by oil this past week has been ominous, suggesting that supplies of refined products is getting worse, and not better. The EU oil ban on Russia further complicates that picture and I am wondering how long markets can continue bottom-fishing elsewhere while ignoring oil’s price rise.

Overnight, Brent crude rose by 2.05% to USD 121.65 a barrel, and today, it has rallied another 1.20% to USD 123.10. WTI rallied by 2.20% to USD 177.65 overnight, gaining another 0.80% to USD 118.55 in Asia today. Brent crude is now a hair’s breadth away from resistance at USD 123.80, after which there is no resistance on the charts until USD 131.60 a barrel. Support lies at USD 116.00 a barrel. WTI has taken out resistance at USD 116.70 a barrel, which now becomes support, followed by USD 116.00. The USD 120.00 region will provide some psychological, and possibly option-related resistance, but there is now nothing on the charts until USD 126.80 barrel.

Markets will find no solace from this week’s OPEC+ production meeting, as outlined in yesterday’s note. If China is reopening, and Europe is limiting Russian oil, there is only one obvious direction from here, for too long, ignored by markets. Only a surprise Iran deal, unlikely as they are seizing tankers at the moment, or a capitulation to Venezuela’s autocratic government, could change the supply/demand dynamic. Neither would alleviate the squeeze in refined products underpinning the rally.

Gold trades sideways

Gold seems determined to bore traders to death after another inconclusive overnight range-trading session. It probed resistance around USD 1860.00 an ounce overnight but retreated to finish just 0.14% higher at USD 1855.80 an ounce, marking another inconclusive session. Ominously, gold has fallen in Asia at the first sign of US Dollar strength, Gold has eased by 0.13% to USD 1853.50 an ounce. ​ Gold’s price action continues to suggest caution, with the US dollar sell-off not translating to any meaningful gold strength. If global risk sentiment turns lower, gold could quickly follow.

Gold has nearby support at USD 1840.00, followed by USD 1836.00 an ounce. Failure sees the possibility of a mini-capitulation by longs that could reach as far as USD 1780.00 an ounce. Gold has resistance here at USD 1862.00, then USD 1870.00, followed by USD 1886.00 an ounce, its 100-day moving average.

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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