Oil slips on OPEC+, gold drifting

Oil falls on OPEC+

Oil prices fell overnight as OPEC+ took less than 30 minutes to go ahead with adding scheduled 400,000 bpd of production to global markets. Additionally, the group revised their consumption forecasts to swing to a production surplus of 2.5 million bpd in 2022. Oil prices fell initially but were salvaged later in the session after official US Crude Inventory data recorded a surprise 7.0 million-barrel fall.

Brent crude finished the overnight session 0.55% lower at USD 71.30, and WTI closed 0.40% lower at USD 68.25 a barrel, having spiked lower to near USD 67.00 intraday. The noise of the overnight session has not been repeated in Asia, where both contracts have recorded a modest 0.15% recovery. Brent crude is trading at USD 71.40 and WTI at USD 68.35 a barrel.

Both contracts are flirting with support at their 100-DMAs, with WTI closing below it. The inability to maintain support at USD 72.00 and USD 68.00, respectively, suggests that the downside remains the path of least resistance now. It is also notable that the giant falls in US crude inventories and the production closures from Hurricane Ida have had no meaningful, supportive impacts on oil prices. Therefore, Brent crude could test USD 70.00 and WTI USD 67.00 a barrel ahead of tomorrow’s US jobs data.

Gold is unchanged once again

Gold finished another session unchanged for the 3rd day in a row, closing at USD 1814.00 an ounce overnight. It continues to trade aimlessly in a narrow range in Asia, easing 0.15% to USD 1811.60 an ounce.

For now, gold appears to be off investors’ radars, but my concerns that upward momentum is stalling are increasing. After the V-shaped recovery last week, gold has been unable to break out of the confines of its 100 and 200-DMAs, today at USD 1814.50 and USD 1809.40 an ounce, respectively. Notably, it has failed to find any upward momentum from the US dollar retreat this week, which is a significant warning sign of a loss of upward momentum.

Gold is vulnerable to a potentially sharp fall through USD 1800.00 an ounce ahead of the US data tomorrow, which could flush out fast-money longs, potentially extending losses to USD 1780.00 an ounce. Gold has resistance at USD 1820.00 and then a formidable resistance zone between USD 1830.00 and USD 1835.00 an ounce.

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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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