Oil back under pressure
Oil couldn’t hang on to earlier gains, slipping back into negative territory as the session wore on. WTI is closing in on USD35 again and further losses are looking likely. The next key level is USD33, a particular area of interest back in May when crude was trading around these levels.
This also coincides with USD35 in Brent, a break of which could be the tipping point as far as OPEC+ are concerned. There’s a couple of weeks until the next JMMC meeting and the next full meeting of OPEC and its allies isn’t until the end of November/start of December. Can they afford to wait that long? A move back towards USD30 may force them to act sooner, in some form or another. A postponement of January’s two million barrel increase may be enough for now. We’ll get a look at US Crude Inventories on Wednesday. Crude prices fell after last week’s report, which showed a large surplus of 4.3 million barrels. This was much higher than the forecast of 1.5 million barrels.
Gold bounce nothing to get excited about
Gold prices are bouncing back a little at the end of the week but I’m not particularly encouraged. The yellow metal has come under pressure this week as risk appetite has deteriorated and the dollar has come back into favour. This may just be a bit of a technical bounce after gold fell back to the August and September lows around USD1,850.
Gold continues to look vulnerable and a break below USD1,850 is now looking increasingly possible, especially if this week’s risk aversion carries into next. The first couple of days in particular will be interesting as Covid news over the weekend isn’t going to be positive, barring a shock vaccine announcement. A break of USD1,850 will potentially open up a move back towards USD1,800.
