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- Jan, 07 Crude Tempers its Record-Breaking Run but the Overall Trend Remains Intact
- Jan, 04 US Dollar Consolidates Above Support on Signs of Chinese, US Economic Recovery
- Dec, 23 US Dollar, Japanese Yen Lag in Low Volume Trading - US New Home Sales Down 11.3%
- Dec, 17 Oil, Gold Reverse Lower as US Dollar Surges on Fed Rates Outlook
- Dec, 17 Crude Accelerates its Reversal on a Sharp Drop in Inventories, Jump in Consumption
- Dec, 16 Gold, Metals Set to Correct Higher Ahead of US Rate Decision
- Dec, 16 Crude Snaps its Worst Bear Trend in 8 Years
- Dec, 15 Crude Oil, Metals Face Dense Economic Calendar
- Dec, 14 Speculative Interests Giving Way to Fundamentals as Crude Oil Extends its Record Breakout Plunge
- Dec, 14 Oil, Metals Under Pressure as Dollar Gains on Fed Outlook
- Dec, 11 Can Crude Break Pull Up From its Worst Trend in Six Years?
- Dec, 10 Crude Oil Suffers its Worst Bear Trend in Three Years
- Dec, 10 Oil Drop Continues, Gold May Bounce Before Selling Resumes
- Dec, 10 Gold Struggling through its Most Acute Correction since the Financial Crisis
- Dec, 09 Oil Technical Positioning Points Sharp Losses Ahead
- Dec, 08 Crude Oil Prolongs it Worst Bear Trend in Five Months on Risk Aversion
- Dec, 08 Oil Prices Break Support, Gold Rebound May Continue
- Dec, 08 Crude Oil’s Descent Extends to a Fourth Session and Hints at a Potentially Critical Trend Reversal
- Dec, 07 Oil Tests Key Support, Gold Has Scope to Rebound
- Dec, 05 Gold Suffers its Biggest Daily Drop in a Year as the Dollar Surges
Crude extended the sharp reversal sparked yesterday; but the follow through into Friday’s close was far more tempered. This is consistent with the bigger pattern of price action for the past five weeks.
North American Commodity Update
Commodities - Energy
Oil Extends its Pull Back as Risk Aversion Looks to Close the Week
Crude Oil (WTI) - $76.72 // -$0.74 // -0.96%
Crude extended the sharp reversal sparked yesterday; but the follow through into Friday’s close was far more tempered. This is consistent with the bigger pattern of price action for the past five weeks. A very measured, descending trend channel from the mid-October test of $82/barrel is tempering the commodity and is consequentially anchoring it from driving breakouts that run errant of the general stability in underlying risk appetite. For contrast, the US dollar (the primary valuation tool of crude) has pushed itself into congestion just off its 15-month lows. For speculators, today was the December NYMEX crude contract’s last trading day, which likely contributed to the negative price action. Another view on traders interest in the market, the Commitment of Traders report for the week ending November 17th reported net long positions fell 2 percent to 86,348 – not surprising giving the broad congestion. Commercial (a group that includes refiners) positioning rose 1 percent to a net short holding of 112,612 contracts.
For supply-and-demand fundamentals, the ECB announced further measures to tighten policy by raising collateral standards on Asset-Backed Securities backed loans. The central bank said that these securities would only be accepted with two external credit ratings. This is a modest step, but taken with the expiration of unlimited 12-month loans (as well as similar efforts that have been made by other policy authorities the world over); it is a clear trend towards removing stimulus from the market. On a different tack, the Finance Ministry of Germany (Europe’s largest economy) said fourth quarter growth would likely slow from the third quarter. Looking ahead to next week, we will see a number of key macro readings that will weigh on demand expectations. Second round 3Q GDP numbers from the US, UK and German will offer detail on headline figures. Supply-side concerns will be fed by the DoE’s inventory figures. With US refineries in the Gulf of Mexico coming back on line this past week after Hurricane Ida passed, a rebound in stockpiles would naturally be expected.
Commodities - Metals
Gold Rallies into the Weekend to Mark a New Record High Close
Spot Gold - $1,151.10 // $6.50 // 0.57%
A slow recovery in the second half of the US equities session helped leverage a late-day rally for spot gold. While the metal wouldn’t overtake its record, intraday high set this past Wednesday; it would nonetheless mark the highest close on record. The disparity in strength between these two sentiment-based markets (gold produced far more meaningful gains and to record highs) highlights a unique level of demand for the commodity. Activity in the futures markets backs an increased interest in gold. Volume on the active December contract has steadily risen in recent weeks and aggregate open interest is at its highest level since January 2008. This strength is born from multiple uses for the global financial market. As a return-based asset, tempered risk appetite may be working to stall spot’s advance, but its appeal as a safe haven, an inflation hedge and diversification asset all act as a backstop. On the other hand, the COT data for this week was not as convincing. The net speculative position fell one percent to a long 235,697-contract holding. Commercial interest fell 1,238 to a net 281,546 short position.
Spot Silver - $18.56 // $0.03 // 0.16%
Silver traded through another session of high volatility without direction. A fourth session of little day to day movement but a wide range is indicative of a balanced market that will not be able to maintain its equilibrium for long. Risk appetite was offer little help in establishing a direction considering many of the benchmark gauges for the speculative markets were either little moved or in the red. As for the positioning data, the CFTC’s commitment report revealed the speculative, net long positioning rose 6.7 percent to 40,480 contracts – an interest comparison to the gold which reported a drop in bullish interest but a much more impressive drive to new highs.
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Written by John Kicklighter, Strategist
Questions or Comments about this article? Send them to jkicklighter@dailyfx.com
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