Oil edges up, gold under pressure

Oil prices spike higher once again

Oil prices rose slightly in New York on Friday, with volatility modest by recent standards. Brent crude finished 0.85% higher at USD 107.80 a barrel, and WTI rose 1.70% to USD 105.35 a barrel.

In Asia, however, prices have spiked higher once again, continuing a trend we saw all last week, where Asia bought oil no matter what the price action was in New York. A Houthi attack on a Saudi energy terminal, warnings of a structural shortfall in production from OPEC, and a potential European Union oil embargo on Russia have seen oil prices jump in Asia. Brent crude is 2.85% higher at USD 110.85 a barrel, while WTI has rallied by 2.25% to USD 107.75 a barrel.

The prices fall of last week appear to have run their course now, being an aggressive and panicked correction to the equally panicked and aggressive reaction to the Russian invasion of Ukraine. As such I believe we have seen the lows in oil now. Brent crude and WTI should settle into a roughly USD 100.00 to USD 120 range. Even if the Ukraine war ends tomorrow, the world will face a structural energy deficit thanks to Russian sanctions.

We are now awaiting geopolitical developments. Although I don’t rule out a test below USD 100.00 on a Ukraine agreement, I believe that any dip to the low USD 90.00’s by oil will be very well supported.

Gold continues to struggle

Gold prices slipped on Friday in another negative day for the metal, as the washout of long positions placed above USD 2000.00 an ounce continued. That was despite lower US yields, with no sign of support from weekend risk-hedging. Gold finished 1.12% lower at USD 1920.50 an ounce.

Gold has eked out a modest gain of 0.33% to USD 1927.00 an ounce in Asia, but momentum is non-existent, and the downside is clearly the weaker side still. Gold has resistance at USD 1950.00 and USD 1960.00 an ounce, its previous capitulation point. Support lies at USD 1918.00, USD 1900.00, and then USD 1880.00 an ounce. A sustained failure of the latter signals gold’s torment continues and that USD 1800.00 an ounce beckons.

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