Oil edges lower, gold range-trades

Oil fall on higher inventories

Oil prices had another big intraday range overnight, but ultimately, booked only a small retreat, continuing a theme of energy mostly ignoring the noise in equity and bond markets this week. Oil prices finished lower after US official crude inventories recorded another 2 million-barrel gain, and as the FOMC later that evening downgraded its US growth outlook.

Still, by oil’s standards, the falls were modest. Brent crude finished 1.65% lower at USD 118.85, with WTI retreating by 2.75% to USD 115.75 a barrel. In Asia, oil has recorded modest gains as Asian buyers take advantage of the overnight price dip. Brent crude and WTI have gained 0.30% to USD 119.15 and USD 116.10 a barrel respectively.

The supply/demand situation, higher natural gas prices, the squeeze on refined products, and lost Russian production all mean that oil prices remain constructive at these levels for now.

Brent crude has immediate support and resistance at its overnight low and high of USD 118.00 and USD 122.00 a barrel. Failure of USD 118.00 opens the door to USD 116.00. WTI’s overnight low at USD 114.60 is immediate support followed by USD 114.00 and USD 112.00. Resistance is at USD 120.00 a barrel.

Gold’s range continues

Gold staged a decent recovery overnight as the post-FOMC price action saw a recovery in risk sentiment and a fall in the US dollar and US yields. Gold rose by 1.40% to USD 1834.00 an ounce. In Asia, gold has slipped slightly to USD 1830.50 an ounce.

Despite the overnight recovery in gold prices, gold bugs should not get too excited. The overnight gain only brings gold back to the middle of its one-month USD 1800.00 to USD 1880.00 range and gold looks as directionless as ever. The overnight price action shows that the inverse correlation to the US dollar is as strong as ever.

Gold has resistance at USD 1840.00 and USD 1880.00, the latter appearing an insurmountable obstacle for now. Support is nearby at USD 1805.00 and then USD 1780.00 an ounce. Failure of the latter sets in motion a much deeper correction, while I would need to see a couple of daily closes above USD 1900.00 to get excited about the upside.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.