Fundamental Analysis

Sentiment Send Oil And Gold Higher In Asia

Typography

Bullish sentiment remained high in Asia as a weaker U.S. Dollar gives helpful tailwinds to both oil and gold.

Oil

Crude oil opened in Asia in a positive mood, with both Brent and WTI rising slightly following on from last week's positive price action. The Baker Hughes Rig Count, released very late on Friday in New York, showed an unchanged headline number at 952 with only a two rig increase in active oil rigs. The slowing pace of increases combined with massive drawdowns last week on both official crude inventory numbers from the U.S. probably explains the positive sentiment in general at the moment.

As we look to the week ahead, attention will remain focused on the U.S. API, and EIA Crude Inventory counts with next Monday the 24th also being an OPEC/Non-OPEC technical management meeting in St Petersburg. Nigeria and Libya have been “invited” to attend, but we feel the chances of either joining the overall cuts is remote as are the chances of any other surprises on that front. Last week's price action has taken the heat of the grouping, for now.

Brent spot trades 48.95 this morning with resistance at 49.70 and then 50.00. Support is at 48.00 and then 47.00.

WTI spot trades at 46.65 with resistance initially at 47.20 before the more formidable 48.20 region. Home to the 100-day moving average. Support comes in at 45.70 and then 45.00.

Gold

Gold picked itself up off the floor Friday, propelled by weaker U.S. CPI and Retail Sales numbers, to rise a stunning 18 dollars to trade as high as 1233.00 before closing at 1228.00. Gold should continue to benefit as yet another set of weak U.S. data forces the world and possibly the Federal Reserve, to reassess the trajectory of U.S. interest rates.

The key resistance level at 1230.50, the 200-day moving average, remained intact as of Friday's close. This morning though, Asia has seized on Friday's move with gold trading through this level to 1232.00 in early trading. Precious metals, in general, should find support on any dip in the early part of the week as Friday's fallout continues.

Gold's next major resistance lies around 1240.00 and then 1247.70, the 100-day moving average. The 1230.50 should be an intra-day pivot with nearby support at 1226.50 and then 1218.50

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