Oil grinds higher on US data
Oil price ground higher overnight, as US Initial Jobless Claims suggested the US recovery remains on track. Also aiding the rally was the general perception that next week’s OPEC+ meeting would leave the pace of production increases unchanged. Markets are becoming increasingly comfortable that any Iranian oil that returns to official international markets will be comfortably absorbed as global economic recovery proceeds. That noise will increase if India starts showing concrete progress in its Covid-19 battle.
Brent crude rose 0.95% to USD69.40 overnight, rising another 0.45% to USD69.70 a barrel in Asia. WTI rose 1.12% to USD66.90 overnight, climbing 0.42% to USD67.20 a barrel in Asia. The expected expansionary US budget announcement this evening lifting the consumption outlook.
Brent crude has resistance just above at USD70.00 a barrel, followed by USD72.00 a barrel. Support lies at USD69.50 barrel, and only failure of significant support at USD68.00 a barrel changes the bullish picture. WTI has resistance at USD68.00, which opens the path for a test of USD70.00 a barrel. Support lies at USD67.00 with only a failure of USD65.00 a barrel, changing the bullish outlook.
Gold moved sideways overnight, finishing unchanged at USD1896.00 an ounce, having probed the USD1900.00 an ounce level once again earlier in the session. Some inflationary nerves have seen gold retreat slightly to USD1892.00 an ounce in Asia.
Ahead of the US budget and data this evening, those same inflation nerves are likely to cap gold gains, as is the Relative Strength Index (RSI), which remains in overbought territory. That suggests that gold is still vulnerable to a downside correction from here, within the greater bullish trend.
Gold has resistance at USD1903.00 and USD1913.00 an ounce, with support at USD1889.00 and USD1875.00 an ounce. Gold’s correction could extend all the way to USD1845.00 an ounce without undermining the greater bullish outlook.