Crude Oil Inventories in Focus, Gold Holds Steady Despite Rallying Equities

Commodities – Energy

Crude Oil Inventories in Focus

Crude Oil (WTI) - $75.55 // -$0.22 // -0.29%

Commentary: Crude oil rallied $0.53, or 0.70%, on Tuesday, breaking a five session losing streak. The advance, however, was quite tame relative to both last week’s decline and the 1.2% rally in equity markets. The oil market may be finally be acknowledging that fact that supply remains abundant, with inventories in the U.S. at 10-year highs. If the API survey is any indication, the DOE report tomorrow will show inventories continuing to surge counter-seasonally (API: Crude +5.86 million, Gasoline +2 million, Distillate +2 million). There have been reports by industry sources that floating storage has been drawing down rapidly, which accounts for much of the build onshore, but even so, the overall supply-demand balance remains very comfortable per the figures released by the International Agency. Per the IEA, OPEC production is above levels necessary to keep inventories stable for this year and next.

Technical Outlook: Prices appear to have found near-term support at the bottom of a rising channel established since late May, now at $75.09. A rebound sees initial resistance at $79.38, with a break beyond that exposing $82.64.

Commodities – Metals

Gold Holds Steady Despite Rallying Equities

Gold - $1225.75 // +$0.90 // +0.07%

Commentary: Gold held steady on Tuesday, despite a positive day for the broad financial markets. The metal fell a mere $0.30, or 0.02%. Gold ETF holdings rebounded nearly 250,000 troy ounces, bringing the total over 66 million troy ounces for the first time since late July. Holdings are still 800,000 below the record set in mid-July. Gold’s latest move higher looks to be a resumption of the longer-term uptrend. Traders will likely to viewing dips as buying opportunities, as the focus once against shifts toward longer-term issues regarding sovereign debt and the depreciation of fiat currencies.

Technical Outlook: Prices have stalled after taking out horizontal resistance at $1215.47 yesterday, with this level now acting as support.Positioning suggests that the path of least resistance continues to favor continued gains, with the next upside barrier lining up at $1243.27.

Silver - $18.52 // +$0.01 // +0.04%

Commentary: Silver rose notably, adding $0.12, or 0.65%. The gold/silver ratio declined to 66.16, which is normal fluctuation between the 2010 range of 60 to 71. Look for silver to continue to follow gold price movements, with minor fluctuations in the gold/silver ratio.

Technical Outlook: Prices continue to test the upper boundary of a descending triangle chart formation that has confined spot since mid-May (now at $18.57). The barrier is reinforced by resistance at $18.70, the 8/4 wick high. A break higher would expose the $19.00 figure and $19.25, the downside is underpinned by supports at $18.00 and $17.79.

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