Oil almost unchanged, gold falls

Oil prices are noisy but unchanged

Oil prices had another noisy overnight session, trading in wide intraday ranges. Ultimately, as the dust settled, both Brent and WTI finished almost unchanged for the second day in a row. The unexpected postponement of the official US Crude Inventory data set due to technical issues likely played a major role in the neutral close, as the data set is one of the most closely monitored in the global energy sphere.

Brent crude fell 0.30% to USD 109.65 overnight, gaining 0.40% to USD 110.10 a barrel in Asia. WTI fell 0.45% to USD 103.95 overnight, before rising 0.55% to USD 104.55 a barrel in Asia. The net result is that oil prices are almost unchanged on a 24-hour basis.

Looking at the respective futures curves, both Brent and WTI are still heavily in backwardation, suggesting that prompt oil supplies remain as tight as ever, even as prices across the curves fall. Increasing recession fears appear to be prompting a culling of heavy speculative long positioning in both contracts, even as in the real world, energy tightness is as real as ever.

The technical picture is interesting. Brent crude has tested its 100-day moving average and the 2022 support line at USD 107.30, but managed to bounce back to USD 110.00 a barrel. A daily close under USD 107.30 implies a deeper move potentially reaching USD 100.00 initially.

WTI’s technical picture is much softer, having closed below its 2022 support line at USD 106.30, and its 100-DMA, today at USD 105.50 a barrel. Failure of its weekly low at USD 101.50 could trigger a capitulation by speculative longs that moves WTI under USD 100.00 a barrel, although I suspect a lot of the damage has already been done.

Gold falls overnight

Gold bugs once again appear to have lost patience, as gold fell by 0.82% to USD 1822.50 overnight, edging slightly higher to USD 1824.00 an ounce in Asia. Probably most concerning was that gold fell as the US dollar remained mostly unchanged and US yields had another big move lower. Even cryptos managed to move slightly higher overnight. With that in mind, it appears that gold is going into the end of the week looking vulnerable, although I am not betting against the USD 1800.00 to USD 1870.00 range trade continuing.

Gold has resistance at USD 1860.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, potentially reaching USD 1700.00 an ounce. On the topside, I would need to see a couple of daily closes above USD 1900.00 to get excited about a reinvigorated rally.

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