Oil higher on OPEC+, gold falls

OPEC+ comments send oil higher

Although the pre-OPEC+ JMMC meeting was postponed yesterday due to Russian technical issues, oil still managed to recoup its intra-day losses to finish almost unchanged, as OPEC+ upgraded its consumption forecasts. A much higher fall in US API Crude Inventories also helped prices higher later in the session.

Brent crude finished the day 0.80% higher at USD 75.25 a barrel, while WTI rose 0.95% to USD 73.45 a barrel. In Asia, early gains have been unwound to leave both contracts unchanged.

Markets have primarily priced in OPEC+ raising production by 0.50 million barrels a day at tomorrow’s meeting, and a lesser number would now cause a spike in prices. Month and quarter-end flows will see choppy range trading today ahead of the meeting tomorrow.

I expect Brent crude to range noisily between USD 73.50 and USD 76.50 a barrel and WTI between USD 72.00 and USD 74.50 a barrel. A break of any of those support resistance levels will signal oil’s next directional move. I am happy to be patient at these levels as OPEC+ has surprised and burnt me before.


Gold is vulnerable to more losses

US dollar strength pushed gold lower overnight, breaking support at USD 1760.00 an ounce, leading to a spike lower to USD 1750.50, likely on stop-losses. It then recovered to finish the day 1.0% lower at USD 1761.00 an ounce.

Despite a late recovery and being unchanged in Asia, gold only just managed to close above the USD 1760.00 an ounce support, which will now be an intra-day pivot point. Gold is vulnerable to more US dollar strength, and the plethora of tier-1 data over the next two days will test the mettle of long-suffering bullish gold investors.

Failure of USD 1750.00 now will signal a deeper retest of USD 1720.00 an ounce. Any rallies are likely to be capped at USD 1780.00 ahead of solid resistance between USD 1790.00 and USD 1800.00 an ounce. One factor supporting the beleaguered yellow metal is its relative strength index (RSI). The RSI remains just above oversold territory and could assist gold in recovering any sudden sell-offs.

The USD 1680.00 an ounce region remains my line in the sand on the longer-term chart picture. A comprehensive failure means all bullish bets are off.

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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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