OPEC + comments send oil higher
Although the pre-OPEC + JMMC meeting was postponed yesterday due to Russian technical problems, oil still managed to offset its day-to-day losses to end almost unchanged as OPEC + improved its consumption forecasts. A much higher drop in crude inventories of U.S. APIs also helped prices rise 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 unfolded leaving both contracts unchanged.
Markets mainly priced OPEC + by increasing production by 0.50 million barrels per day at tomorrow’s meeting, and a smaller number would now cause prices to rise. Monthly and quarter final flows will see an exchange rate range today ahead of the meeting tomorrow.
I expect Brent crude range to be noisily between $ 73.50 and $ 76.50 a barrel and WTI between $ 72.00 and $ 74.50 a barrel. A break of any of these support resistance levels will signal the next directional movement of oil. I am happy to be patient at these levels because OPEC + has surprised and burned me before.
Gold is vulnerable to more losses
U.S. dollar strength pushed gold lower overnight, breaking support at USD 1760.00 an ounce, leading to a spike lower to USD 1750.50, likely at stop losses. It then recovered to end the day 1.0% lower at USD 1761.00 an ounce.
Despite a late recovery and unchanged in Asia, gold has only managed to close above the USD 1760.00 ounce support, which will now be an in-day pivot point. Gold is vulnerable to more U.S. dollars, and the abundance of level 1 data over the next two days will test the courage of patient bullish gold investors.
A failure of USD 1750.00 will now signal a deeper retest of USD 1720.00 an ounce. Some rallies will likely be limited to USD 1780.00 before solid resistance between USD 1790.00 and USD 1800.00 an ounce. One factor supporting the besieged yellow metal is its relative strength index (RSI). The RSI remains just above oversold territory and could help gold regain some sudden sales.
The USD 1680.00 ounce area remains my line in the sand on the longer-term chart image. Extensive failure means that all bullish bets go off.