Oil Rallies as Gold Points to Nowhere
Oil prices rallied strongly in energy commodities overnight. Brent crude was up almost 9.0% from its lows for the week.
Overnight, the OPEC+ monitoring committee reiterated their commitment to maintaining production-cut discipline. The group also warned of action against uncooperative members of the grouping.
Unfavorable weather events also helped the price rise in America’s oil-producing and refining South. Although Hurricane Sally has passed, it has left behind extensive floods. At the same time, more tropical depressions are forecast to be on their way.
In the near-term, this should keep a weather floor under WTI prices.
Brent crude rose 2.30% to USD43.30 a barrel overnight. WTI climbed through its 200-DMA, increasing 2.0% to USD40.90 a barrel.
Brent crude will find resistance at its 50-DMA at USD43.70 a barrel. This will be with support at USD41.60, its overnight low.
WTI is testing resistance at its 50-DMA today at USD41.10 a barrel. This is with support now at its 200-DMA at USD40.20 a barrel. Moreover, further resistance is at USD42.00 a barrel.
The best of the supportive news is likely now baked into spot prices. That is with both Brent and WTI nearly 10% higher over the week.
Commodity news reports that further substantial gains from these levels will be harder. Fundamentals weighing on prices, falling consumption outlooks, excess or immediate supply, and the end of US driving season remain unchanged. They should reassert themselves at these levels.
Gold Loses its Luster Overnight
Gold faded in precious metals overnight trading, falling by 0.80% to USD1944.00 an ounce. Like currency and equity markets, gold traders appear to have gone into the FOMC meeting long. With that, investors continue to see a reduction in speculative long positioning.
The yellow metal has risen with equities in Asia, climbing 0.40% to USD1951.50 an ounce. But in the bigger picture, it remains range bound between USD1920.00 an ounce, and USD1973.00 an ounce.
Markets expect this state of affairs to continue into the weekend. The gold is off investors’ radars for now and speculative interest is reduced.
