Oil prices edge higher on Ida
With the amount of actual damage to the US Gulf of Mexico production and refining infrastructure still unclear, oil prices edged higher overnight on supply concerns. Brent crude rose 1.10% to $73.35, with WTI climbing 0.70% to $69.10 a barrel.
Prices have eased in Asia after soft China PMI data and news that the critical US Colonial oil pipeline will partially reopen post-Ida. Brent crude has slipped 0.40% to $73.05, and WTI has retreated by 0.35% to $68.65 a barrel.
Attention will now turn to the OPEC+ meeting tomorrow, which will almost certainly keep its output policy unchanged and add another 400,000 barrels per day to production. Brent crude between $70.00 and $75.00 a barrel seems to be the grouping’s sweet spot, and with the futures curve in backwardation, demand remains robust despite the short-term noise. Last week’s V-shaped recovery in prices will also give OPEC+ confidence that markets can absorb the extra supply.
While we await more visibility from OPEC+ and IDA, I expect Brent crude to remain in a $72.00 to 74.00 a barrel range. Similarly, $68.00 to $70.00 a barrel should contain WTI.
Gold consolidates on technical support
With currency and bond markets having a quiet session yesterday, gold saw some profit-taking on long positions. Gold edged 0.40% lower to $1810.50 an ounce in a nondescript session. Today, a weaker US dollar in Asia has seen the yellow metal add 0.25% as it climbs to $1815.00 an ounce.
Gold’s rally seems to have run out of momentum for now, but that said, it is not showing any meaningful signs of fatigue here either. Gold has nearby support in the shape of the 100 and 200-day moving averages (DMAs) at $1809.70 and $1813.20 an ounce. As long as gold holds above this zone on a closing basis, it will continue consolidating gains.
Only a fall through $1780.00 an ounce will call the rally’s longevity into question while it faces formidable resistance between $1830.00 to $1835.00 an ounce. Like currency markets, gold looks to be waiting for Friday’s US employment data to determine its next directional move.