Oil markets charged higher overnight, unwinding all of their previous day’s slump. Oil’s rally was powered by impressive PMI data from Europe and the United States and the Suez Canal blockage through which nearly 10% of seaborne oil passes typically.
Brent crude rose by 6.20% to USD64.15 overnight, and WTI rose 6.0% to USD60.80 a barrel overnight. Prices in Asia have fallen, with both Brent and WTI easing 1.10% lower today. The reason for the fall is stories circulating (unconfirmed), that the container ship blocking the Suez Canal has been refloated and is being moved.
If true, oil should continue falling, but given the positive PMI data overnight, I do not believe we will see a complete unwinding of the overnight rally. A roughly 50% retracement to around USD62.00 and USD59.00 a barrel, respectively, sounds more reasonable. Oil markets are unlikely to renew their upward momentum aggressively until OPEC+’s next meeting in early April, which should leave production cuts unchanged.
Brent crude has support at USD60.30 and USD60.00 a barrel. Failure opens deeper losses to USD57.50 a barrel. Resistance is at USD65.00 a barrel. WTI has a triple bottom at USD57.35, and failure sets the scene for deeper losses to USD55.00 a barrel. Resistance is at USD62.50 a barrel.
Gold ranges quietly
Gold appears to be off most investors’ radars at the moment, but despite US dollar strength overnight, it rose slightly by 0.40% to USD1734.00 an ounce. It has edged slightly higher to USD1736.00 an ounce in another moribund Asian session.
Gold looks set to continue ranging between USD1720.00 and USD1750.00 an ounce, part of a broader, longer-term bottoming pattern. Gold’s overall price action remains construction, though, and the yellow metal is attempting to form a longer-term base, between its 61.80% and 50.0% Fibonacci retracements, setting the scene for a move back above USD1800.00 an ounce if all goes to plan.
Gold has support at USD1720.00 and USD1700.00 an ounce, followed by the 61.80% retracement in the USD1685.00 area. It has initial resistance at USD1755.00 an ounce, followed by the 50.0% retracement at USD1760.00 an ounce.