13th January Oil and Gold Overview
Commodity Overview
Focus on Oil & Gold
Over the last five days we have seen oil futures make new yearly lows at $83.95 before aggressively rejecting these levels.
Thoughts from the trading floor
From a technical perspective oil appears less bullish than a week ago. Yesterday it broke back below 2009 highs ($81.99) and after closing below this level the short term mood may have shifted. Yesterday the market bounced off support at $79.92 so this will be the first target to the downside today; below that support exists around $75.50 and $74.90. To the upside resistance lies at $83.95 and $89.84.
Last night the American Petroleum Institute reported that US inventories rose 1206K barrels last week. This compares to the analysts estimate for the DOE number of a 1500K barrel rise. The API Gasoline showed a build of 6824K apposed to the estimates for the DOE number of 1700K. In past occasions when we have seen such a large discrepancy between the API number and DOE expectations we have seen the market has moved prior to the number as traders try to anticipate the release. This provides a short term trading opportunity but it is important to note the biggest moves off the headline number have come when it has been at odds with the API.
Unlike oil, gold futures have suffered from the recent USD strength, since the highs made late last year at $1226 we have seen the market aggressively sell off. Now the gold futures appear to have stabilised around the $1125 level with support at $1070-5 and resistance at $1163. The strong links with the USD hint that a continuation in strong fundamental data out of the USD will have a depressing impact on gold prices pushing them back down towards the $1000 mark.
Bull View
Oil bulls will be keen not to loose their momentum and will look for some consolidation before re-establishing the uptrend. Support at $79.97 may provide a battleground over the next few days.
Bear View
Bears know the importance of equity weakness developing if they are to push much lower, retail sales as well as JP Morgan and Intel earnings will therefore draw their attention this week.
Futex View
Oil looks to have reached an interim high and we expect the market to consolidate over the next few days before making its next move.
