Another wild day for oil
The headless chickens populating oil markets had another day in the sun overnight, sending oil prices rocketing higher after a lower US API Crude Inventory figure, and riding the wave of diminishing virus caution as the news tickers stayed relatively quiet. Tonight’s official US Crude Inventories are expected to fall by 2.5 million barrels. Assuming omicron stays away from its Bad Santa role, a lower number could be the excuse needed in the chicken run to propel prices higher once again.
OPEC+, of course, continues to lurk in the background, and their free option on quickly reigning in production to support prices from the last meeting open should continue to be a warning to overenthusiastic bears. If Brent crude heads towards USD 65.00 a barrel, I wouldn’t discount OPEC+ stepping in. Given that compliance is over 100%, this would process would be easy to achieve.
Brent crude rose by 2.70% to USD 74.00 a barrel overnight, climbing slightly to USD 74.10 in Asia. Brent crude has resistance at USD 74.40 and then USD 76.00 a barrel, with support at USD 73.25, the 200-DMA. WTI rocketed 3.0% higher to USD 71.25 a barrel overnight, adding 10 cents to USD 71.35 in Asia. It has resistance at USD 73.00 a barrel, with support at USD 70.55, its 200-DMA. Trading in Asia is reflecting the same cautious approach seen in Asian equity markets today. Headless chickens can run in any direction randomly.
Gold is sleepless in Singapore
Gold probed USD 1800.00 an ounce overnight but quickly retreated as US yields rose, finishing almost unchanged at USD 1789.00 an ounce. Asian trading is moribund, gold edging slightly lower to USD 1788.50 an ounce as regional markets move into holiday mode.
Gold’s attempts to stage a meaningful recovery continue to disappoint, with traders cutting long positions at the very first sign of trouble intra-day. Gold lacks the momentum, one way or another, to sustain a directional move up or down. Likely, gold will remain a forgotten asset class and face another week of choppy range trading.
Gold has formed a rough double top around the USD 1815.00 region which will present a formidable barrier at $1840.00. Support lies at USD 1790.00, followed by USD 1780.00 an ounce. USD 1790.00 to USD 1815.00 could well be the range for the week.
