Oil marches higher, gold yawns

Oil’s rally continues

Oil’s march higher continued unhindered overnight, with Brent and WTI posting another set of impressive gains. A surprise drop by US API Crude Inventories by 3.8 million barrels helped the bullish momentum, with markets ignoring the rise in refined product stocks. Disruptions to Libyan and Ecuadorian production were supportive, but the Macron remarks yesterday around Saudi Arabia and the UAE’s limited production capacity seems to have been the main driver.

OPEC meets today and tomorrow, but the meeting is likely going to be just a rubber stamp exercise this month. More important will be tonight’s US official Crude Inventory data from the EIA, which is a double header release, including last week’s delayed release due to technical issues. With two weeks of data coming out, it will be a bit of a turkey shoot tonight and we can expect plenty of volatility around the release. I am not going to predict the outcome on this one, but I believe the oil price downside remains limited.

Brent crude rose by 2.40% to USD 118.15 overnight but has retreated by 1.30% to USD 116.70 a barrel in Asia today. WTI rose by 1.90% to USD 111.90 overnight, falling 0.90% to USD 111.00 a barrel in Asia. The price action seems to be in line with the general correction lower by the US dollar in Asia today. ​

Notably, Brent crude tested and held its rising longer-term support line, today at USD 108.00, and its 100-day moving average (DMA) last week. That is a technical development that should be respected. Brent crude has support at USD 115.75, and then USD 111.50. Resistance here is at USD 118.50, and then USD 120.00 a barrel.

WTI’s technical picture has improved markedly overnight after regaining its rising 2022 support line at USD 108.00 a barrel. It has resistance at USD 112.50 which clears the way for a retest of USD 116.00. Support is at USD 109.75 and then USD 108.00 a barrel.

Gold is sleepless in Singapore

Gold remains the forgotten asset class, finishing 0.15% lower at USD 1820.00 overnight, before creeping up to USD 1821.00 an ounce in Asia today. A series of lower daily highs suggests that downside risks are increasing for gold prices, although it still lacks momentum to break out of the USD 1800 to USD 1900.00 range. Bring a good book until we see a large directional move by the US dollar.

Gold has resistance at USD 1840.00, USD 1860.00, and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally.

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, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was 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 and Channel News Asia as well as in leading print publications such as 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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