Oil’s rally runs out of fuel
Despite a lower US dollar and upbeat US data, oil failed near its range highs and finished the day only slightly higher. Ample spot supplies and nagging doubts about the consumption picture moving forward continue to sap oils attempts to break out of the topside of its long summer-holiday ranges. The failure overnight suggests that incipient momentum has waned with more consolidation ahead.
Brent crude rose 20 cents to USD45.75 a barrel overnight and has climbed 15 cents to USD45.90 a barrel in Asian trading. On a positive note, the contract is holding above its 200-day moving average (DMA) at USD45.60 a barrel. Resistance remains Monday’s high at USD46.50.
WTI also edged 20 cents higher to USD43.05 a barrel overnight, where it has remained in the Asian session. It has resistance at USD43.50 and USD43.75 a barrel, with support lying at USD42.40 a barrel.
Tonight’s US EIA Crude Inventories may provide some short-term volatility but are unlikely to provide enough impetus to break oil out of its recent trading ranges.
Gold eases in Asia after a disappointing close
Gold traded as high as USD1992.50 an ounce overnight but failed well short of the USD2000.00 an ounce mark, retreating to finish the session a non-descript 0.15% higher at USD1970.50 an ounce overnight. The price action can only be described as underwhelming and disappointing and with one eye on currency and oil markets, suggests that upward momentum has stalled temporarily.
Indeed, gold could be in for a more decisive corrective move lower in the short-term, with prices falling by 0.40% to USD1962.50 an ounce in Asia today. More concerning is that gold’s primary driver, US yields, actually moved lower again overnight, yet gold could not sustain any advances.
Gold has initial support at USD1955.00 an ounce with a failure opening the possibility of a more substantial move lower to the bottom of its recent range around USD1920.00. The overnight high and the USD2000.00 an ounce region remain initial resistance zones.