OPEC undecided, US Crude Inventories fall
Oil prices fell overnight as the OPEC+ JTC produced no guidance for the ministerial meeting today, and OPEC quietly reduced their global consumption forecast by 300,000 barrels per day due to Covid-19 restrictions. Official US Crude Inventories fell by 900,000 barrels, but that was not enough to support prices, with markets pricing in no change to the OPEC+ production targets as a done deal. France’s expansion of its lockdown from regional to national added to the gloom for consumption in the near term, with futures markets indicating prompt delivery supplies are ample.
Brent crude eased by 1.50% to USD63.00 a barrel, and WTI fell by 1.60% to USD59.45 a barrel. The Ontario lockdown announcement this morning has seen both contracts ease another 0.25% in Asian trading. Oil seems to have found an equilibrium at these levels, with both contracts sitting in the middle of their admittedly wide, one-week ranges. The risks are likely to be skewed to the downside though even if OPEC+ remains unchanged as expected. If they grant Russia a slightly higher quota, the downside momentum will increase.
Brent crude has support at USD62.55 and USD60.40 a barrel, with resistance at USD64.80 and USD65.50 a barrel. WTI has support at USD58.80, USD58.30, and USD57.20 a barrel, with resistance at USD61.15 and USD63.20 a barrel.
Gold is down but not out
Gold staged a robust rally overnight, unwinding much of the previous sessions falls. Gold rose 1.35% to USD1707.50 an ounce overnight, gaining support from a weaker US dollar intra-day, but holding onto those gains as the US dollar reversed course later in the session. Once again, I suspect that month and quarter-end portfolio rebalancing flows had much to do with gold’s strength, in the absence of any other apparent factors to explain the price action.
Gold has managed to rally once again off the 61.80% Fibonacci retracement support at USD1685.00 an ounce and has now traced out four daily lows just below USD1680.00 an ounce. That is a positive technical development and suggests that the longer-term bottoming structure is still holding on, albeit by a thread. Gold needs to recapture resistance at USD1720.00 an ounce for gold bulls to breathe easier once again.
Gold has risen another six dollars to USD1713.50 an ounce in Asia as local investors add some risk-hedging insurance ahead of the long weekend. Gold has support at USD1705.00 an ounce, followed by a band between USD1675.00and USD1685.00 an ounce, a series of daily lows and the Fibonacci retracement. Resistance is at USD1720.00 an ounce, followed by USD1745.00 and USD1760.00 an ounce, the latter being the 50% Fibonacci level.
