Oil falls on EIA, gold pares gains

Oil retreats on delayed EIA data

Oil prices reversed course overnight as the delayed US official EIA crude inventory data was released. With two weeks of data released at once, net crude inventories fell by 3.15 million barrels, but gasoline inventories rose by 4.13 million barrels for the fortnight. Brent crude had tested USD 120.00 intraday but fell back to finish 2.15% lower at USD 115.60 a barrel. WTI tested USD 114.00 intraday but also slumped to finish 2.15% lower at USD 109.55 a barrel. In Asia. Both contracts have added 0.40% to USD 116.05 and USD 110.00 a barrel.

Although OPEC+ meets today, the meeting is likely going to be just a rubber stamp exercise this month. Looking under the bonnet of the two-week EIA release, some of the headline numbers flatter to deceive. The net drop in crude oil inventories was flattered by SPR releases, while the gasoline stock jump is because US refineries are running at over 95.0% capacity. This is an unsustainable run rate in the medium-term and the underlying numbers suggest the supply situation is as challenging as ever. With Ecuadorian and Libya production plummeting and no progress in Europe/Iran nuclear talks, any downside in oil prices should be limited.

Brent crude has support here at USD 116.00, followed by USD 111.30, the 100-day moving average (DMA) at USD 109.80 and then the rising 2022 support line, today at USD 108.30 a barrel. It has resistance at USD 120.00 and USD 121.25 a barrel.

WTI has support at USD 109.25, then its rising 2022 support line at USD 108.00, followed by the 100-DMA at USD 106.50 a barrel. It has resistance at USD 112.50, USD 114.00, and then USD 116.00 a barrel.

Gold underwhelms again

Gold staged an intraday rally towards USD 1833.00 overnight, but it once again ran out of steam as US dollar strength swept the markets on haven inflows. That reversed the weak rally and sent gold to a weak close, falling 0.12% to USD 1818.00 an ounce. Gold continues to trace out lower highs which suggests that risks are increasing of a large downside move. Gold has seen no haven inflows, which seem to all be heading into US dollars and the US bond market.

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.

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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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