Crude Oil Falls on Abundant Supplies, Gold ETF Holdings Follow Price Higher

Commodities – Energy

Crude Oil Falls on Abundant Supplies

Crude Oil (WTI) - $75.50 // $0.08 // 0.11%

Commentary: Crude oil resumed its downtrend on Wednesday, falling $0.35, or 0.46%. Things were looking much worse early in the session, as traders anticipated a bearish inventory report after the API survey indicated the crude oil stocks had built over 5 million barrels last week. The DOE report did not reveal such a build, however, and in fact, showed that crude oil inventories declined by 0.8 million barrels. That being said, the overall report was still bearish as total petroleum inventories built 5.3 million barrels, sending levels further into 10-year high territory. Moreover, product stocks remain at record seasonal levels. On the other hand, one bright spot is demand, with year-over-year growth of 3.1% over the last four weeks. In the bigger picture, crude oil will likely continue to be rangebound as abundant supplies offset a bullish worldwide demand picture.

Technical Outlook: Prices continue to stall at the bottom of a rising channel established since late May, now at $75.20. A rebound sees initial resistance at $79.38, with a break beyond that exposing $82.64. Alternatively, a move to the downside exposes $72.07.

Commodities – Metals

Gold ETF Holdings Follow Price Higher

Gold - $1229.45 // $0.00 // 0.00%

Commentary: Gold continued to rally, adding $4.60, or 0.38% on Wednesday. Gold ETF holdings have begun to climb in recent sessions and Wednesday was no exception as levels increased 200,000 troy ounces on top of yesterday’s 250,000 troy ounces. As we noted during gold’s decline in July, price sometimes leads ETF holdings, as momentum traders pile in and out based upon performance. Now that gold is back in an uptrend, traders are likely in a ‘buy the dips’ mentality.

Technical Outlook: The bulls appear to have reasserted themselves after pausing yesterday, with prices resuming their advance after taking out horizontal resistance at $1215.47 earlier in the week en route to challenge $1243.27. The $1215.47 level has now been re-cast as support.

Silver - $18.46 // $0.09 // 0.50%

Commentary: Silver notably underperformed gold on Wednesday, shedding $0.15, or 0.81%, after outperforming on Tuesday. The move was a normal fluctuation in the gold/silver ratio. The ratio stands at 66.60 versus the 2010 range of 60 to 71.

Technical Outlook: Prices continue to test the upper boundary of a descending triangle chart formation that has confined spot since mid-May (now at $18.55). 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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