Although official US Crude Inventories fell by a much larger 8 million barrels overnight, the US API data seems to have telegraphed the move. As such, it appears to have been priced in, and with gasoline stocks not falling by as much as expected, long positions were squeezed out. That sent Brent crude 1.35% lower to USD68.50 a barrel, with WTI falling 1.30% to USD65.25 a barrel.
Prices have abruptly reversed in Asia, and it seems that the return of China and Japan from holiday has seen buyers in both countries sending prices higher. Brent crude has added 0.80% to USD69.05 a barrel, and WTI has added 0.45% to USD65.70 a barrel.
Despite the Asian buying, both contracts are marking time, albeit with a bias to the upside. Choppy range trading has been the week’s theme, and we are likely to continue until the US data tomorrow. Brent crude remains comfortably above support at USD68.00 a barrel with resistance at USD70.00 and USD71.00 a barrel. WTI has support at USD63.00 a barrel with resistance at USD66.50 a barrel. It remains comfortably in its rising parallel channel that extends back to the start of April.
The price action suggests that oil is a buy on dips, with both contracts consolidating at the top of their weekly ranges. A strong print from the Nonfarm Payrolls should be enough to restore the recovery narrative after a few US data wobbles this week.
Gold continues to range trade
Gold has highlighted the dangers of getting bullish at the top, and bearish at the bottom this week. It’s clearly denoted support at USD1760.00 an ounce and resistance at USD1800.00 has proven impervious to directional breaks.
Gold rose to USD1787.00 an ounce yesterday, advancing to USD1788.50 an ounce in tepid Asian trading. Nevertheless, the support and resistance levels must be respected as this week’s price action has unceremoniously highlighted.
Gold will likely stage a breakout one way or the other post the US Nonfarm Payrolls. The topside is more likely to capitulate as predictions of a one million-plus jobs added has become a very crowded trade. An on-expectation release could see both US yields and the US dollar head lower, lifting gold through USD1800.00 an ounce.