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 $75.25 a barrel, while WTI rose 0.95% to $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 $73.50 and $76.50 a barrel and WTI between $72.00 and $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 $1760.00 an ounce, leading to a spike lower to $1750.50, likely on stop-losses. It then recovered to finish the day 1.0% lower at $1761.00 an ounce.
Despite a late recovery and being unchanged in Asia, gold only just managed to close above the $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 $1750.00 now will signal a deeper retest of $1720.00 an ounce. Any rallies are likely to be capped at $1780.00 ahead of solid resistance between $1790.00 and $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 $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.