Commodities and Cryptos: $80 oil, Gold bears still in control, Bitcoin consolidates

Oil

WTI crude is knocking on the $80 door and it seems a supply deficiency will shortly allow it to come through.  A weak payrolls report gave oil prices a little boost on the initial weaker dollar move.  The US economic recovery is clearly still feeling the delta variant impact and that might explain some of the softness in crude demand.

The brewing global energy crisis is just getting started and all the major risks still support another major move higher for oil prices.  Russia may deliver more natural gas to the EU and the US may try to coerce OPEC+ into delivering more barrels of crude with threats of tapping SPR, but those won’t stop oil’s super commodity cycle.  Much attention is falling on US output and energy traders need to remember that under a Biden administration, US production will see limited upside.  The Energy Secretary knows that the card to tap reserves needs to be done when the oil price rally gets out of hand.  Until it is clear how  cold this winter will be and how quickly does global travel start to return, no one is taking the threat of tapping SPR seriously.

WTI crude could see massive technical buying as the next major resistance doesn’t show up until the $90 level.

Gold

Gold bears are saying, “Just when I thought I was out, they pull me back in.”  Gold’s rollercoaster ride started with a weak payrolls report that suggested interest rate hike forecasts may have been too optimistic about last year.  Gold surged to $1,782.40 as the dollar weakened and real yields fell deeper into negative territory.  After digesting the report, gold investors quickly realized that the taper announcement is still happening in November and that pricing pressures are still elevated and that could still dictate higher interest rates next year.

Complicating gold’s outlook has been the fervor over cryptocurrencies.  Gold’s still in for a choppy period, but it may now start consolidating between $1725 and $1800.

Crypto

Bitcoin is consolidating after a solid week of gains.  The weak employment report should have been bullish for Bitcoin, but exhaustion from this week’s rally settled in.  Bitcoin volatility could remain elevated in the weekend, but if there is a Saturday pump it will be hard for that to last when several exchanges open on Sunday night.

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